变动成本法与吸收成本法课件

变动成本法与吸收成本法变动成本法与吸收成本法1Absorption Costing 吸收成本法A system of accounting for costs in which both fixed and variable production costs are considered product costs.FixedCostsVariableCostsProductAbsorption Costing 吸收成本法 A sys2Variable Costing 变动成本法A system of cost accounting that only assigns the variable cost of production to products.FixedCostsVariableCostsProductVariable Costing 变动成本法A syste3Absorption and Variable CostingAbsorption and Variable Costin4Absorption and Variable CostingThe difference between absorption and variable costing is the treatment of fixed manufacturing overhead.Absorption and Variable Costin5Lets put some numbers to an example andsee what we can learn about the differencebetween absorption and variable costing.Absorption and Variable CostingLets put some numbers to an e6Greenberg Case see:P 581 Greenberg Case see:P 581 7Variable costing Fixed factory overhead not to be allocated to the products manufactured.Unit product cost only includes variable manufacturing costs(direct materials,direct labor,variable factory overhead)Variable costing Fixed factory8Unit product cost 20X0 20X1Direct material$1.31.3Direct labor 1.51.5Variable factory overhead 0.20.2Standard variable manufacturing cost$3$3Unit product cost$3$3Ending inventory cost 30,000 310,0003Unit product cost 20X0 9Sales revenue(140,000$5)700,000 Variable expenses:Opening inventory 0 +cost of goods manufactured(170,000$3)510,000 -ending inventory(30,000$3)90,000 cost of goods sold (140,000$3)420,000 variable selling expense(5%of sales)35,000Total variable expenses 455,000Contribution Margin 245,000 Fixed expenses:fixed factory overhead 150,000 fixed selling and administrative expenses 65,000 total fixed expenses 215,00 Operating income(variable costing)30,000Sales revenue(140,000$5)10Sales revenue(160,000$5)800,000 Variable expenses:Opening inventory (30,000$3)90,000 +cost of goods manufactured(140,000$3)420,000 -ending inventory(10,000$3)30,000 cost of goods sold(160,000$3)480,000 variable selling expense(5%of sales)40,000Total variable expenses 520,000Contribution Margin 280,000 Fixed expenses:fixed factory overhead 150,000 fixed selling and administrative expenses 65,000 total fixed expenses 215,00 Operating income(variable costing)65,000Sales revenue(160,000$5)11Absorption costing Fixed factory overhead to be allocated into the product manufactured.Unit cost of product includes all manufacturing costs(direct material,direct labor,variable factory overhead,and fixed factory overhead)Absorption costing Fixed facto12Standard unit cost expected Fixed factory overhead$150,000 to be allocated into the products under fixed overhead rate.Fixed overhead rate=budgeted FFO/expected volume of production=$150,000/150,000=$1 Production volume variance=(actual volume expected volume)fixed overhead rate Standard unit cost expected 13Standard unit cost of product=standard variable manufacturing cost+fixed overhead rate=$3+$1=$4 Standard unit cost of product 14Unit cost 20X0 20X1Direct material$1.3Direct labor 1.5Variable factory overhead 0.2Standard variable manufacturing cost$3$3Total fixed factory overhead$150,000$150,000 Expected Production units 150,000 150,000 Unit fixed factory overhead$11 Unit product cost$4$4Ending inventory cost 30,000 410,0004Unit cost 20X0 20X1Direct15Sales revenue(140,000$5)700,000cost of goods sold:Opening inventory 0 +cost of goods manufactured(170,000$4)580,000 -ending inventory(30,000$4)120,000 cost of goods sold(140,000$4)560,000Gross margin 140,000 Production-volume variance(170,000 150,000)20,000Gross profit at actual 160,000Selling expenses 65,000 Selling commissions(5%of sales)35,000Operating income(variable costing)60,000Sales revenue(140,000$5)16Sales revenue(160,000 5)800,000cost of goods sold:Opening inventory(30,000$4)120,00 +cost of goods manufactured(140,000 4)560,000 -ending inventory(10,000 4)40,000 cost of goods sold(160,000 4)640,000Gross margin 160,000 Production-volume variance(140,000 150,000)-10,000Gross profit at actual 150,000Selling expenses 65,000 Selling commissions(5%of sales)40,000Operating income(variable costing)45,000Sales revenue(160,000 5)817 Variable costing 20X020X1Sales revenue700,000800,000Variable expenses 455,000520,000Contribution margin245,000280,000Fixed expenses 215,000215,000Operation income 30,000 65,000Beginning inventory 090,000Ending inventory 90,00030,000 Variable costing 20X020X1Sale18 Absorption costing 20X020X1Sales revenue700,000800,000 manufacturing cost 560,000640,000Gross margin140,000160,000Production variance 20,000-10,000Non-manufacturing expenses 100,000105,000Operation income 60,000 45,000Beginning inventory 0120,000Ending inventory 120,00040,000 Absorption costing 20X020X1S19Selection of expected activity level for computing the fixed overhead rate Fixed overhead rate=budgeted FFO/expected volume of production The higher the level of activity,the lower the rate There are three ways to decide the level of activitySelection of expected activity20Actual costing Normal costing Standard costing Direct materialsActual costs Actual costsstandard price or rate standard inputs allowed for actual output achieved Direct labor Actual costs Actual costsFactory overhead Actual costsBudgeted rate actual inputsActual costing Normal costing 21 Under Actual CostingAllocate fixed factory overhead into products Under Actual C22Unit cost 20X0 20X1Direct material$1.3Direct labor 1.5Variable factory overhead 0.2Standard variable manufacturing cost$3$3Total fixed factory overhead$150,000$150,000Production units 170,000 140,000 Unit fixed factory overhead$0.8821.071Unit product cost$3.882$4.071Ending inventory cost 30,000 3.882 10,0004.071Unit cost 20X0 20X1Direct23Sales revenue(140,000 5)700,000 cost of goods sold:Opening inventory 0 +cost of goods manufactured(170,000 3+150,000)660,000 -ending inventory(30,000 3.882)116,520 cost of goods sold(140,000 3.882)543,480Gross margin 156,520 Selling expenses 65,000 Selling commissions(5%of sales)35,000Operating income(variable costing)56,520Sales revenue(140,000 5)724Sales revenue(160,000 5)800,000 cost of goods sold:Opening inventory (30,000 3.882)116,460 +cost of goods manufactured(140,000 3+150,000)570,000 -ending inventory(10,000 4.071)40,710 cost of goods sold(140,000 3.882)645,750Gross margin 154,250 Selling expenses 65,000 Selling commissions(5%of sales)40,000Operating income(variable costing)49,250Sales revenue(160,000 5)825 Mellon Case Mellon 26Mellon Co.produces a single product with the following information availableAbsorption and Variable Costing Mellon Co.produces a singl27Unit product cost is determined as follows:Absorption and Variable CostingSelling and administrative expenses are always treated as period expenses and deducted from revenue.Unit product cost is determine28Absorption Costing Income StatementsMellon Co.had no beginning inventory,produced 25,000 units and sold 20,000 units this year at$30 each.Absorption Costing Income Sta29Absorption Costing Income StatementsMellon Co.had no beginning inventory,produced 25,000 units and sold 20,000 units this year at$30 each.Absorption Costing Income Sta30Mellon Co.had no beginning inventory,produced 25,000 units and sold 20,000 units this year at$30 each.Absorption Costing Income StatementsMellon Co.had no beginning in31Variable Costing Income StatementsVariable Costing Income State32Variable Costing Income StatementsWe exclude thefixed manufacturingoverhead.Variable Costing Income Statem33Variable Costing Income StatementsVariable Costing Income Statem34Comparing Absorption andVariable CostingLets compare the methods.Comparing Absorption andVaria35Comparing Absorption andVariable CostingLets compare the methods.Comparing Absorption andVaria36Comparing Absorption andVariable CostingLets compare the methods.Comparing Absorption andVaria37Reconciling Income Under Absorption and Variable CostingWe can reconcile the difference between absorption and variable net income as follows:Fixed mfg.overhead$150,000 Units produced 25,000=$6.00 per unit=Reconciling Income Under Absor38Extending the ExampleLets look at the secondyear ofoperationsfor MellonCompany.Extending the ExampleLets loo39Mellon Co.Year 2In its second year of operations,Mellon Co.started with an inventory of 5,000 units,produced 25,000 units and sold 30,000 units at$30 each.Mellon Co.Year 2 In its sec40Mellon Co.Year 2Unit product cost is determined as follows:There has been nochange in Mellonscost structure.Mellon Co.Year 2Unit product 41Mellon Co.Year 2Now lets look at Mellons income statementassuming absorption costing is used.Mellon Co.Year 2Now lets loo42Mellon Co.Year 2Units in ending inventory from the previous period.Mellon Co.Year 2Units in endi43Mellon Co.Year 225,000 units produced in the current period.Mellon Co.Year 225,000 units 44Mellon Co.Year 2Next,well look at Mellons income statementassuming variable costing variable costing is used.Mellon Co.Year 2Next,well l45Mellon Co.Year 2Mellon Co.Year 246Mellon Co.Year 2Excludes fixed manufacturing overhead.Mellon Co.Year 2Excludes fixe47SummaryIn the first period,production(25,000 units)was greater than sales(20,000).In the second period,production(25,000 units)was less than sales(30,000).SummaryIn the first period,pr48SummaryFor the two-year period,total absorptionincome and total variable income are the same.SummaryFor the two-year period49SummaryLets see if we can get an overview of what we have done.SummaryLets see if we can get50Summary Comparison of Absorption(AC)and Variable Costing(VC)This was the case in the first period when production of 25,000 units was greater than sales of 20,000 units.Inventory increased from zero to 5,000 units and$120,000 absorption income was greater than$90,000 variable income.Summary Comparison of Absorpti51Summary Comparison of Absorption(AC)and Variable Costing(VC)In the second period sales of 30,000 units In the second period sales of 30,000 units were greater than production of 25,000were greater than production of 25,000.Summary Comparison of Absorpti52Summary Comparison of Absorption(AC)and Variable Costing(VC)Inventory decreased from 5,000 units to zero,and$230,000 absorption income was less than$260,000 variable income.Summary Comparison of Absorpti53Summary Comparison of Absorption(AC)and Variable Costing(VC)For the two-year period,units produced equals units sold,so total absorption incomeequals total variable income.Summary Comparison of Absorpti54Cost-Volume-Profit AnalysisCVP includes all fixed costs to compute breakeven.Variable costing and CVP are consistent as both treat fixed costs as a lump sum.Absorption costing defers fixed costs into inventory.Absorption costing is inconsistent with CVP because absorption costing treats fixed costs on a per unit basis.Cost-Volume-Profit AnalysisCVP55AdvantagesManagement finds it easy to understand.Consistent withCVP analysis.Emphasizes contribution in short-run pricing decisions.Profit for period notaffected by changesin fixed mfg.overhead.Impact of fixedcosts on profitsemphasized.Evaluation of Variable CostingAdvantagesManagement finds it56AdvantagesConsistent with long-runpricing decisions that mustcover full cost.External reportingand income tax lawrequire absorption costing.Evaluation of Absorption CostingFixed manufacturing overhead istreated the same as the other productcosts,direct material and direct labor.AdvantagesConsistent with long57Impact of JIT Inventory MethodsIn a JIT inventory system.Production tendsto equal sales.So,the difference between variable andabsorption income tends to disappear.Impact of JIT Inventory Method58