3.23 may%2025%20ch15

3.23 may%2025%20ch15 - ACIS 222 Absorption and Variable...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
1 ACIS 222 Absorption and Variable Costing Reading: Eldenburg et al. Chapter 15 (excluding Throughput costing)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch15- Ch15- 2 Key Topics Absorption and variable costing: comparison Income statements using absorption and variable costing The uses and limitations of absorption and variable costing
Background image of page 2
Ch15- Ch15- 3 Income statement Absorption costing Sales - Cost of sales Gross margin - Operating expenses Net income before tax + Beginning Finished goods inventory + Cost of goods manufactured - Ending Finished goods inventory Selling expenses Administrative expenses
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch15- Ch15- 4 Cost of goods manufactured Absorption costing Beginning Work in process inventory + Direct materials used + Direct labour + Manufacturing overhead - Ending Work in process inventory Cost of goods manufactured Beginning Raw materials inventory + Purchases - Ending Raw materials inventory
Background image of page 4
Ch15- Ch15- 5 Income statement Variable costing Sales - Variable expenses Contribution margin - Fixed expenses Net income Variable Cost of goods sold Variable Selling expenses Variable Administrative expenses Fixed Overhead Fixed Selling expenses Fixed Administrative expenses
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch15- Ch15- 6 Classification of costs Absorption Variable Direct material Product Product Direct labour Product Product Variable overhead Product Product Fixed overhead Product Period Selling expenses Period Period Administrative expenses Period Period
Background image of page 6
Ch15- Ch15- 7 Absorption Variable used for external reporting required under IFRS assigns all manufacturing costs to products inventory valued at average cost encourages producing for inventory used for internal reporting, performance evaluation & decision- making not allowed under IFRS treats fixed manufacturing costs as period costs inventory valued at incremental cost encourages producing for demand
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch15- Ch15- 8 Example 1: Inventory Valuation Units, beginning inventory 0 Units produced 6 000 Units sold ($18 per unit) 5 000 Normal volume 6 000 Variable costs per unit: Direct materials $5 Direct labour $3 Variable overhead $1 Variable selling and administrative $2
Background image of page 8
Ch15- Ch15- 9 Fixed costs: $ Fixed overhead 24 000 Fixed selling and admin. 9 000 Required : Calculate unit cost and value ending inventory using absorption costing using variable costing
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/23/2009 for the course BCOM ACIS 222 taught by Professor Neilcrombie during the Spring '09 term at Canterbury.

Page1 / 43

3.23 may%2025%20ch15 - ACIS 222 Absorption and Variable...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online