CH 16:17 Variable and Absorption costing

CH 16:17 Variable and Absorption costing - overhead $ 20...

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Variable and Absorption costing Per unit data at standard assume no variance except a potential volume variance Sales price per unit $50 Production costs Direct Material $5 Direct Labor $3 Variable Manufacturing overhead $2 Fixed manufacturing overhead $1 Period costs Variable Selling costs $5 per unit Fixed selling and administrative cost $20 Normal production or capacity 10 units Variable cost (contribution margin) Income statement Absorption costing Income statement Produce 10 units and sell 10 units Sales $ 500 Sales $ 500 Variable cost of production Cost of goods sold $ 110 Materials $ 50 Gross margin $ 390 Labor $ 30 Period costs Variable manufacturing
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Unformatted text preview: overhead $ 20 Variable Selling costs $ 50 Variable period costs $ 50 $ 150 Fixed selling and administrative costs $ 20 Contribution margin $ 350 Income $ 320 Fixed manufacturing overhead $ 10 Fixed selling and administrative costs $ 20 Income $ 320 Income is the same under both because production=sales To do the inventory change effect to reconcile the income under the internal variable costing income statement and the absorption costing income statement. Income reported under variable costing $320 + Fixed manufacturing costs in ending Finished goods $0 -Fixed manufacturing costs in beginning Finished goods $0 = Income reported under absorption costing $320...
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