chapter%2080 - Chapter 8 Absorption and Variable Costing 1...

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September 7, 2011 Accounting 2102 1 Chapter 8 Absorption and Variable Costing
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Absorption Costing (what we have been using so far and is required by GAAP) September 7, 2011 Accounting 2102 2 Consistent with the preparation of a “normal” Income Statement and Balance Sheet Ignores cost behavior and assigns all manufacturing costs to a unit of production Unit product cost = total manufacturing costs ÷ unit produced COGS = unit product cost x units sold Inventory = unit product cost x units in inventory SG&A = (unit variable SG&A x units sold) + total fixed SG&A
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Variable Costing September 7, 2011 Accounting 2102 3 Consistent with the preparation of a Contribution Margin Income Statement Recognizes cost behavior and only assigns variable manufacturing costs to a unit of production Unit product cost = total variable manufacturing costs ÷ units produced Variable costs “follow” units total variable costs = (unit variable manufacturing costs + unit
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This note was uploaded on 09/07/2011 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at University of Georgia Athens.

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chapter%2080 - Chapter 8 Absorption and Variable Costing 1...

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