Absorption vs. Variable Costing Brindle Arts uses Variable Costing for internal purposes, but uses Absorption Costing for their financial reports. The following information is for Quarter 2 and Quarter 3 of 2020. Calculate unit product costs for Quarters 2 & 3 for Variable and Absorption Costing, prepare an income statement for each method, then show why there is a difference between the two. Selling price per unit 200 Quarter 2 Variable costs per unit Quarter 3 Units in beginning inventory Production (in units) Sales (in units) Ending inventory Direct materials Direct labor Variable overhead Variable S&A 3,000 65.00 15,000 7,500 $ 30.00 12,000 10,500 2$ 15.00 3,000 10.00 Fixed Costs in total Fixed manufacturing overhead Fixed selling & administrative $350,000 $200,000 Show the difference between variable costing NOI and absorption costing NOI. Variable Costing Compute the unit product costs for Quarters 2 & 3 Quarter 2 Quarter 3 Units in beginning inventory + units produced |- units sold = units in ending inventory Quarter 2 Quarter 3 Variable unit product cost Prepare an income statement for Quarters 2 & 3 FOH costs in ending inventory FOH in beg. inv. = FOH deferred in inventory or (released from inventory) Quarter 2 Quarter 3 Sales Variable expenses: Select one Select one Variable COGS Variable NOI Add: FOH deferred in inv. Less: FOH released from inv. Absorption costing NOI Variable S&A Total variable expenses Contribution Margin Fixed expenses: **Hint: be Fixed MOH Fixed S&A Total fixed expenses Net Operating Income
Absorption vs. Variable Costing Brindle Arts uses Variable Costing for internal purposes, but uses Absorption Costing for their financial reports. The following information is for Quarter 2 and Quarter 3 of 2020. Calculate unit product costs for Quarters 2 & 3 for Variable and Absorption Costing, prepare an income statement for each method, then show why there is a difference between the two. Selling price per unit 200 Quarter 2 Variable costs per unit Quarter 3 Units in beginning inventory Production (in units) Sales (in units) Ending inventory Direct materials Direct labor Variable overhead Variable S&A 3,000 65.00 15,000 7,500 $ 30.00 12,000 10,500 2$ 15.00 3,000 10.00 Fixed Costs in total Fixed manufacturing overhead Fixed selling & administrative $350,000 $200,000 Show the difference between variable costing NOI and absorption costing NOI. Variable Costing Compute the unit product costs for Quarters 2 & 3 Quarter 2 Quarter 3 Units in beginning inventory + units produced |- units sold = units in ending inventory Quarter 2 Quarter 3 Variable unit product cost Prepare an income statement for Quarters 2 & 3 FOH costs in ending inventory FOH in beg. inv. = FOH deferred in inventory or (released from inventory) Quarter 2 Quarter 3 Sales Variable expenses: Select one Select one Variable COGS Variable NOI Add: FOH deferred in inv. Less: FOH released from inv. Absorption costing NOI Variable S&A Total variable expenses Contribution Margin Fixed expenses: **Hint: be Fixed MOH Fixed S&A Total fixed expenses Net Operating Income
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 28P: The following information pertains to Vladamir, Inc., for last year: There are no work-in-process...
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