Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Product Costs
Period Costs
Variable Selling and Administrative Expenses Fixed Selling and Administrative Expenses
Period Costs
Finished Goods
Period Costs
Stassen uses standard costing Stassens management wants to prepare an income statement for 2009 (the fiscal year just ended) to evaluate the performance of the telescope product line
Ending Inventory
2,000
Direct manufacturing labor cost per unit Manufacturing overhead cost per unit Total variable manufacturing cost per unit Variable marketing cost per unit sold Fixed manufacturing costs (all indirect) Fixed marketing costs (all indirect)
$ $
200 185
Absorption Costing Direct materials, direct labor, and variable mfg. overhead Fixed mfg. overhead ($? ? units) Unit product cost
Variable Costing
Selling and administrative expenses are always treated as period expenses and deducted from revenue.
Reconciliation
We can reconcile the difference between absorption and variable income as follows:
Variable costing net operating income $ 1,230,000 Add: Fixed mfg. overhead costs deferred in inventory (2,000 units $135 per unit) 270,000 Absorption costing net operating income $ 1,500,000
Included in Inventory
=$135 X Ending Inv. $270,000 $135,000 $0
Amount Expensed
=$135 X Units Sold $810,000 $945,000 $1,080,000
2,000 1,000 0
$0 $0 $0
All other 2009 data given earlier for Stassen also apply for 2010 and 2011.
2010
2011
$2,490,000 $2,152,500 $337,500 13.6%
3. Difference
4. Difference as a % of absorption-costing operating income
= = = = = =
2010
$1,335,000
$1,537,500 ($202,500)
2011
$2,490,000
$2,152,500 $337,500
Summary
Denominator- Level Capacity Concept Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity utilization
Budgeted Fixed Manufacturing Costs per Year $1,080,000 $1,080,000 $1,080,000 $1,080,000
Practical capacity
Normal capacity utilization Master-budget capacity utilization
$200
$200 $200
$90
$108 $135
$290
$308 $335
3,000
$200
$360
$560