practice formulas

# practice formulas - D. SGA is the same for both E. OPY 1....

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II. Problems A. Inventory 1. Building inventory = produce more than we sell 2. Depleting inventory = selling more than produced B. Costs 1. Find VC on a per unit basis 2. Find SGA in total 3. Find MOH in total and on a per unit basis III. Calculating operating income A. SR (COGS, expensing product costs) GP (SGA) OPY B. SR is the same for both C. COGS (unit product cost x number of units sold) 1. Variable unit cost = total manufacturing costs total units produced 2. Absorption a) Unit cost = Total manufacturing costs + total fixed MOH total units produced total units produced b) Increasing production decreases unit FC, decreasing unit cost, decreasing COGS, increasing OPY c) Decreasing production increases unit FC, increasing unit cost, increasing COGS, decreasing OPY

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Unformatted text preview: D. SGA is the same for both E. OPY 1. Variable a) All fixed MOH is deducted from revenue b) Results in a higher OPY when inventory is lost because absorption costing takes extra MOH from the balance sheet and expenses it 2. Absorption a) Only fixed MOH for the units sold is deducted from revenue b) Results in a higher OPY when building inventory because not all MOH has been expensed F. Ending inventory 1. BI + produced – sold = EI x unit product cost 2. Usually greater under absorption because variable unit cost does not include fixed MOH but absorption variable cost does IV. Overtime (once all units produced are sold) there is no difference between reporting OPY using variable or absorption costing...
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## This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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practice formulas - D. SGA is the same for both E. OPY 1....

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