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    Kenneth Pimentel
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    1) The document shows variable and absorption costing analyses for a company's sales, costs of goods sold, operating expenses, and net income for January. 2) Under variable costing, the company shows a net loss of $300,000 for January, while absorption costing shows a breakeven result. 3) Absorption costing allocates fixed manufacturing overhead to inventory, resulting in higher cost of goods sold and eliminating the net loss.

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    1) The document shows variable and absorption costing analyses for a company's sales, costs of goods sold, operating expenses, and net income for January. 2) Under variable costing, the company shows a net loss of $300,000 for January, while absorption costing shows a breakeven result. 3) Absorption costing allocates fixed manufacturing overhead to inventory, resulting in higher cost of goods sold and eliminating the net loss.

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    13 views23 pages

    Variable Absorption Costing Formula New

    Uploaded by

    Kenneth Pimentel
    1) The document shows variable and absorption costing analyses for a company's sales, costs of goods sold, operating expenses, and net income for January. 2) Under variable costing, the company shows a net loss of $300,000 for January, while absorption costing shows a breakeven result. 3) Absorption costing allocates fixed manufacturing overhead to inventory, resulting in higher cost of goods sold and eliminating the net loss.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 23

    VARIABLE COSTING

    JAN
    Sales 18,000,000.00
    Less: Variable Cost of Sales
    Direct Materials 5,400,000.00
    Direct Labor 2,700,000.00
    Factory Overhead 900,000.00
    Total 9,000,000.00
    Manufacturing Margin 9,000,000.00
    Less: Variable Marketing Costs 1,800,000.00
    Contribution Margin-Final 7,200,000.00
    Less: Fixed Costs
    Manufacturing 3,000,000.00
    Selling 4,500,000.00
    Administrative -
    Total 7,500,000.00
    Net Income(Loss) (300,000.00)

    VARIABLE OTHER FORMAT


    JAN
    Sales 18,000,000.00
    Less: Cost of Sales
    Inventory Beg. -
    COGM 10,000,000.00
    Less: Inventory End 1,000,000.00
    COGS 9,000,000.00
    Gross Profit 9,000,000.00
    Less: Operating Expenses
    Selling & Admin
    Variable 1,800,000.00
    Fixed 4,500,000.00
    Fixed Manufacturing 3,000,000.00
    Total 9,300,000.00
    Net Income(Loss) (300,000.00)
    COSTS
    Sales 2,000.00
    Product Cost
    DM 600.00
    DL 300.00
    V FOH 100.00
    Total 1,000.00
    Period Cost
    V Marketing 200.00
    Manufacturing 3,000,000.00
    Selling 4,500,000.00
    Administrative

    UNITS
    Beg. Inventory -
    Production 10,000.00
    Units Avail. For Sale 10,000.00
    End. Inventory 1,000.00
    Sales 9,000.00
    ABSORPTION COSTING
    Sales 18,000,000.00
    Less: Variable Cost of Sales
    Direct Materials 5,400,000.00
    Direct Labor 2,700,000.00
    Factory Overhead 3,600,000.00
    Total 11,700,000.00
    Manufacturing Margin 6,300,000.00
    Less: Variable Marketing Costs 1,800,000.00
    Contribution Margin-Final 4,500,000.00
    Less: Fixed Costs
    Selling 4,500,000.00
    Administrative -
    Total 4,500,000.00
    Net Income(Loss) -

    OTHER FORMAT
    JAN
    Sales 18,000,000.00
    Less: Cost of Sales
    Inventory Beg. -
    COGM 13,000,000.00
    Less: Inventory End 1,300,000.00
    COGS 11,700,000.00
    Gross Profit 6,300,000.00
    Less: Operating Expenses
    Selling & Admin
    Variable 1,800,000.00
    Fixed 4,500,000.00
    Total 6,300,000.00
    Net Income(Loss) -
    Sales 2,000.00
    COSTS Product Cost
    DM 600.00
    DL 300.00
    V FOH 100.00
    Fixed Total 3,000,000.00 F FOH 300.00
    Total 1,300.00
    Period Cost
    V Marketing 200.00
    Selling 4,500,000.00
    Administrative

    UNITS
    Beg. Inventory -
    Production 10,000.00
    Units Avail. For Sale 10,000.00
    End. Inventory 1,000.00
    Sales 9,000.00
    REMEASUREMENT
    Operating Income (Absorption Costing) -
    Add: Fixed Overhead Beg. Inventory -
    Less: Fixed Overhead End. Inventory 300,000.00
    Operating Income (Variable Costing) (300,000.00)

    Total Per Unit Rate


    Selling Price 2,000.00 100%
    Variable:
    Direct Material 600.00
    Direct Labor 300.00
    Variable FOH 100.00
    Variable Sell & Admin 200.00
    Total 1,200.00 60%
    Contribution Margin 800.00 40%
    Fixed:
    FOH 3,000,000.00
    Sell & Admin 4,500,000.00
    Total 7,500,000.00

    BEP/Units= 9,375.00
    Break-Even in Sales= 18,750,000.00
    VARIANCE
    FAVORABLE UNFAVORABLE
    COST DEDUCT ADD
    STANDARD VARIABLE COSTING
    Sales 280,000.00
    Less: Variable Cost
    Direct Materials 112,000.00
    Direct Labor -
    Factory Overhead -
    Variable Standard Cost 112,000.00
    Unfavorable Variable Variance 5,000.00
    Variable Marketing Cost 28,000.00
    Total 145,000.00
    Contribution Margin-Final 135,000.00
    Less: Fixed Costs
    Manufacturing 54,000.00
    Selling 20,000.00
    Administrative -
    Total 74,000.00
    Net Income(Loss) 61,000.00

    VARIABLE OTHER FORMAT


    JAN
    Sales 280,000.00
    Less: Cost of Sales
    Inventory Beg. 4,000.00
    COGM 120,000.00
    Less: Inventory End 12,000.00
    COGS at Standard 112,000.00
    Unfavorable Variable Variance 5,000.00
    Total 117,000.00
    Gross Profit 163,000.00
    Less: Operating Expenses
    Selling & Admin
    Variable 28,000.00
    Fixed 20,000.00
    Fixed Manufacturing 54,000.00
    Total 102,000.00
    Net Income(Loss) 61,000.00
    COSTS
    Sales 10.00
    Product Cost
    DM 4.00
    DL -
    V FOH -
    Total 4.00

    Period Cost
    V Marketing 1.00
    Manufacturing 54,000.00
    Selling 20,000.00
    Administrative

    UNITS
    Beg. Inventory 1,000.00
    Production 30,000.00
    Units Avail. For Sale 31,000.00
    End. Inventory 3,000.00
    Sales 28,000.00

    Unfavorable Variable Variance 5,000.00

    For variable variance follow mo lang sa table kung anong sign


    Unfavorable Favorable
    "+" "-"

    g anong sign
    STANDARD ABSORPTION COSTING
    Sales 10,980,000.00
    Less: Variable Cost of Sales
    Direct Materials 4,392,000.00
    Direct Labor -
    Factory Overhead 5,490,000.00
    COGS at Standard 9,882,000.00
    Unfavorable Variable Variance 5,000.00
    Unfavorable Volume Variance 500,000.00
    Total 10,387,000.00
    Manufacturing Margin 593,000.00
    Less: Variable Marketing Costs 1,098,000.00
    Contribution Margin-Final (505,000.00)
    Less: Fixed Costs
    Selling 20,000.00
    Administrative -
    Total 20,000.00
    Net Income(Loss) (525,000.00)

    OTHER FORMAT
    JAN
    Sales 10,980,000.00
    Less: Cost of Sales
    Inventory Beg. 9,000.00
    COGM 9,900,000.00
    Less: Inventory End 27,000.00
    COGS at Standard 9,882,000.00
    Variance Variable 5,000.00
    Unfavorable Volume Variance 500,000.00
    Total 10,387,000.00
    Gross Profit 593,000.00
    Less: Operating Expenses
    Selling & Admin
    Variable 1,098,000.00
    Fixed 20,000.00
    Total 1,118,000.00
    Net Income(Loss) (525,000.00)
    Sales 10.00
    COSTS Product Cost
    DM 4.00
    DL
    V FOH
    Fixed Total 6,000,000.00 F FOH 5.00
    Total 9.00
    Period Cost
    V Marketing 1.00

    Selling 20,000.00
    Administrative

    UNITS
    Beg. Inventory 1,000.00
    Actual Production 1,100,000.00
    Units Avail. For Sale 1,101,000.00
    End. Inventory 3,000.00
    Sales 1,098,000.00

    Budgeted Capacity 1,200,000.00 Unfavorable Favorable


    Unfavorable Variable Variance 5,000.00 "+" "-"

    Unfavorable Volume Variance 500,000.00

    For variable variance follow mo lang sa table kung anong sign


    table kung anong sign
    REMEASUREMENT
    Operating Income (Absorption Costing) (525,000.00)
    Add: Fixed Overhead Beg. Inventory 5,000.00
    Less: Fixed Overhead End. Inventory 15,000.00
    Operating Income (Variable Costing) (535,000.00)
    VARIANCE
    FAVORABLE UNFAVORABLE
    COST DEDUCT ADD
    REQ 1

    ABSORPTION COSTING
    Sales 20,700,000.00
    Cost of Goods Sold
    Beg. Imventory 1,980,000.00
    Current Production 13,200,000.00
    Goods Available for Sale 15,180,000.00
    Less: End. Inventory 1,380,000.00 13,800,000.00
    Gross Margin 6,900,000.00
    Factory Overhead Capacity Variance 500,000.00
    Income from Manufacturing 6,400,000.00

    VARIABLE COSTING
    Sales 20,700,000.00
    Variable Cost of Goods Sold
    Beg. Imventory 1,155,000.00
    Current Production 7,700,000.00
    Goods Available for Sale 8,855,000.00
    Less: End. Inventory 805,000.00 8,050,000.00
    Gross Margin 12,650,000.00
    FIXED FOH 6,000,000.00
    Income from Manufacturing 6,650,000.00

    REQ 2

    ABSORPTION COSTING
    Sales 26,100,000.00
    Cost of Goods Sold
    Beg. Imventory 1,380,000.00
    Current Production 16,100,000.00
    Goods Available for Sale 17,480,000.00
    Less: End. Inventory 747,500.00
    COGS Standard 16,732,500.00
    (Favorable) Capacity Variance 900,000.00
    COGS Actual 15,832,500.00 15,832,500.00
    Income from Manufacturing 10,267,500.00

    REQ 3

    VARIABLE COSTING
    Sales 26,100,000.00
    Variable Cost of Goods Sold
    Beg. Imventory 805,000.00
    Current Production 9,800,000.00
    Goods Available for Sale 10,605,000.00
    Less: End. Inventory 455,000.00 10,150,000.00
    Gross Margin 15,950,000.00
    FIXED FOH 5,400,000.00
    Income from Manufacturing 10,550,000.00
    Sales 18.00
    COSTS Product Cost RECONCILIATION R
    V COST 7.00 Net Income, Absorption Costing
    F FOH TOTAL 6,000,000.00 F FOH 5.00 Add: Fixed FOH Inventory 1/1/19
    Total 12.00 Total
    UNITS Less: Fixed FOH Inventory 12/31/19
    Beg. Inventory 165,000.00 Net Income, Direct Costing
    Actual Production 1,100,000.00
    Units Avail. For Sale 1,265,000.00
    End. Inventory 115,000.00
    Sales 1,150,000.00

    Budgeted Capacity 1,200,000.00

    5.00 F FOH/UNIT = (FIXED COST-VOLUME or CAPACITY VARIANCE)/ACTUAL PROD


    OR
    5.00 F FOH/UNIT = FIXED COST/BUDGETED CAPACITY

    Sales 18.00
    COSTS Product Cost
    V COST 7.00
    F FOH TOTAL 5,400,000.00 F FOH 4.50
    Total 11.50
    UNITS
    Beg. Inventory 115,000.00
    Actual Production 1,400,000.00
    Units Avail. For Sale 1,515,000.00
    End. Inventory 65,000.00
    Sales 1,450,000.00

    Budgeted Capacity 1,200,000.00

    Volume Variance (900,000.00)

    RECONCILIATION 2019
    Net Income, Absorption Costing 10,267,500.00
    Add: Fixed FOH Inventory 1/1/19 575,000.00
    Total 10,842,500.00
    Less: Fixed FOH Inventory 12/31/19 292,500.00
    Net Income, Direct Costing 10,550,000.00
    CILIATION REQ 1
    ption Costing 6,400,000.00
    entory 1/1/19 825,000.00
    7,225,000.00
    entory 12/31/19 575,000.00
    6,650,000.00

    RIANCE)/ACTUAL PRODUCTION

    ED CAPACITY
    REQ 1

    VARIABLE COSTING
    Sales 280,000.00
    Variable Cost of Goods Sold
    Beg. Imventory 4,000.00
    Current Production 120,000.00
    Total Available for Sale 124,000.00
    Less: End. Inventory 12,000.00
    Variable COGS Standard 112,000.00
    Unfavorable Variable Variance 5,000.00 117,000.00
    Gross Margin 163,000.00
    Variable Marketing 28,000.00
    Contribution Margin Final 135,000.00
    Fixed FOH 54,000.00
    Fixed Marketing 20,000.00 74,000.00
    Income from Manufacturing 61,000.00

    REQ 2
    Sales 280,000.00
    Less: Cost of Sales
    Inventory Beg. 5,500.00
    COGM 165,000.00
    Goods Available for Sale 170,500.00
    Less: Inventory End 16,500.00
    COGS at Standard 154,000.00
    Unfavorable Variable Variance 5,000.00
    Unfavorable Volume Variance 9,000.00 168,000.00
    Gross Profit 112,000.00
    Less: Operating Expenses
    Selling & Admin
    Variable 28,000.00
    Fixed 20,000.00 48,000.00
    Net Income(Loss) 64,000.00
    GIVEN
    UNITS
    Budgeted Production 36,000.00

    Beg. Inventory 1,000.00


    Actual Production 30,000.00
    Goods Available for Sale 31,000.00
    Less: End. Inventory 3,000.00
    Sales 28,000.00

    COST
    Sales Price per Unit 10.00

    Variable Product Cost 4.00


    Variable Marketing 1.00

    Fixed FOH 54,000.00


    Fixed Marketing 20,000.00
    Unfavorable Favorable
    Unfavorable Variable Variance 5,000.00 "+" "-"

    GIVEN
    Sales 10.00
    COSTS Product Cost
    V Product Cos 4.00
    Fixed Total 54,000.00 F FOH 1.50
    Total 5.50
    Period Cost
    V Marketing 1.00
    Fixed Marketing and Admin 20,000.00
    UNITS
    Beg. Inventory 1,000.00
    Actual Production 30,000.00
    Units Avail. For Sale 31,000.00
    End. Inventory 3,000.00
    Sales 28,000.00

    Budgeted Capacity 36,000.00


    Unfavorable Variable Variance 5,000.00
    Unfavorable Favorable
    Unfavorable Volume Variance 9,000.00 "+" "-"
    REQ 1

    VARIABLE COSTING
    YEAR 1 YEAR 2
    Sales 1,000,000.00 1,500,000.00
    Less: Variable Cost of Goods Sold:
    Beginning Inventory - 100,000.00
    Add: COGM 500,000.00 500,000.00
    Goods Available For Sale 500,000.00 600,000.00
    Less: Ending Inventory 100,000.00 -
    Cost of Goods Sold 400,000.00 600,000.00
    Variable Selling and Admin Expense 60,000.00 90,000.00
    Total Variable Cost 460,000.00 690,000.00
    Contribution Margin 540,000.00 810,000.00
    Fixed FOH 350,000.00 350,000.00
    Fixed Selling and Admin Expense 250,000.00 250,000.00
    Net Operating Income (60,000.00) 210,000.00

    RECONCILIATION
    YEAR 1 YEAR 2
    Net Income, Absorption Costing 10,000.00 140,000.00
    Add: Fixed FOH Beg. Inventory - 70,000.00
    Total 10,000.00 210,000.00
    Less: Fixed FOH End Inventory 70,000.00 -
    Net Income, Direct Costing (60,000.00) 210,000.00
    COSTS YEAR 1 YEAR 2
    Sales 50.00 50.00
    Product Cost
    DM 8.00 8.00
    DL 10.00 10.00
    V FOH 2.00 2.00
    Total 20.00 20.00

    Period Cost
    Variable M & A 3.00 3.00
    Fixed M & A 250,000.00 250,000.00
    Fixed FOH 350,000.00 350,000.00

    UNITS
    Beg. Inventory - 5,000.00
    Production 25,000.00 25,000.00
    Units Avail. For Sale 25,000.00 30,000.00
    End. Inventory 5,000.00 -
    Sales 20,000.00 30,000.00 Fixed FOH/unit 14.00

    NET INCOME YEAR 1 YEAR 2


    ABSORPTION 10,000.00 140,000.00

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