1、变动成本法与吸收成本法Absorption Costing 吸收成本法 A system of accounting for costs in which both fixed and variable production costs are considered product costs.FixedCostsVariableCostsProductVariable Costing 变动成本法A system of cost accounting that only assigns the variable cost of production to products.FixedCosts
2、VariableCostsProductAbsorption and Variable CostingAbsorption CostingVariable CostingDirect materialsDirect laborProduct costsProduct costsVariable mfg. overheadFixed mfg. overheadPeriod costsPeriod costsSelling & Admin. exp.Absorption and Variable CostingAbsorption CostingVariable CostingDirect mat
3、erialsDirect laborProduct costsProduct costsVariable mfg. overheadFixed mfg. overheadPeriod costsPeriod costsSelling & Admin. exp.The difference between absorption and variable costing is the treatment of fixed manufacturing overhead.Lets put some numbers to an example andsee what we can learn about
4、 the differencebetween absorption and variable costing.Absorption and Variable CostingGreenberg Case see: P 581 Variable costing Fixed factory overhead not to be allocated to the products manufactured. Unit product cost only includes variable manufacturing costs ( direct materials, direct labor, var
5、iable factory overhead ) Unit product cost 20X0 20X1Direct material $1.31.3Direct labor 1.51.5Variable factory overhead 0.20.2Standard variable manufacturing cost $3$3Unit product cost $ 3$ 3Ending inventory cost 30,000 310,0003Sales revenue ( 140,000 $5 ) 700,000 Variable expenses: Opening inventor
6、y 0 + cost of goods manufactured (170,000 $3)510,000 - ending inventory (30,000 $3) 90,000 cost of goods sold (140,000 $3 )420,000 variable selling expense (5% of sales ) 35,000Total variable expenses 455,000Contribution Margin 245,000 Fixed expenses: fixed factory overhead 150,000 fixed selling and
7、 administrative expenses 65,000 total fixed expenses 215,00 Operating income (variable costing ) 30,000Sales revenue ( 160,000 $5 ) 800,000 Variable expenses: Opening inventory (30,000$3) 90,000 + cost of goods manufactured (140,000 $3)420,000 - ending inventory (10,000 $3) 30,000 cost of goods sold
8、 (160,000 $3)480,000 variable selling expense (5% of sales ) 40,000Total variable expenses 520,000Contribution Margin 280,000 Fixed expenses: fixed factory overhead 150,000 fixed selling and administrative expenses 65,000 total fixed expenses 215,00 Operating income (variable costing ) 65,000Absorpt
9、ion costing Fixed factory overhead to be allocated into the product manufactured. Unit cost of product includes all manufacturing costs ( direct material, direct labor, variable factory overhead, and fixed factory overhead) Standard unit cost expected Fixed factory overhead $150,000 to be allocated
10、into the products under fixed overhead rate. Fixed overhead rate = budgeted FFO / expected volume of production = $150,000 / 150,000 = $1 Production volume variance = (actual volume expected volume ) fixed overhead rate Standard unit cost of product = standard variable manufacturing cost + fixed ove
11、rhead rate = $3 + $1 = $4 Unit cost 20X0 20X1Direct material $1.3Direct labor 1.5Variable factory overhead 0.2Standard variable manufacturing cost $3$3Total fixed factory overhead $150,000$150,000 Expected Production units 150,000 150,000 Unit fixed factory overhead $ 11 Unit product cost $ 4$ 4Endi
12、ng inventory cost 30,000 410,0004Sales revenue ( 140,000 $5 ) 700,000cost of goods sold: Opening inventory 0 + cost of goods manufactured (170,000 $4)580,000 - ending inventory (30,000 $4) 120,000 cost of goods sold (140,000 $4) 560,000Gross margin 140,000 Production-volume variance (170,000 150,000
13、)20,000Gross profit at actual 160,000Selling expenses 65,000 Selling commissions ( 5% of sales ) 35,000Operating income (variable costing ) 60,000Sales revenue ( 160,000 5 ) 800,000cost of goods sold: Opening inventory ( 30,000 $4 ) 120,00 + cost of goods manufactured (140,000 4)560,000 - ending inv
14、entory (10,000 4) 40,000 cost of goods sold (160,000 4) 640,000Gross margin 160,000 Production-volume variance (140,000 150,000)-10,000Gross profit at actual 150,000Selling expenses 65,000 Selling commissions ( 5% of sales ) 40,000Operating income (variable costing ) 45,000 Variable costing 20X020X1
15、Sales revenue700,000800,000Variable expenses 455,000520,000Contribution margin245,000280,000Fixed expenses 215,000215,000Operation income 30,000 65,000Beginning inventory 090,000Ending inventory 90,00030,000 Absorption costing 20X020X1Sales revenue700,000800,000 manufacturing cost 560,000640,000Gros
16、s margin140,000160,000Production variance 20,000-10,000Non-manufacturing expenses 100,000105,000Operation income 60,000 45,000Beginning inventory 0120,000Ending inventory 120,00040,000Selection of expected activity level for computing the fixed overhead rate Fixed overhead rate = budgeted FFO / expe
17、cted volume of production The higher the level of activity, the lower the rate There are three ways to decide the level of activityActual costing Normal costing Standard costing Direct materialsActual costs Actual costsstandard price or rate standard inputs allowed for actual output achieved Direct
18、labor Actual costs Actual costsFactory overhead Actual costsBudgeted rate actual inputs Under Actual CostingAllocate fixed factory overhead into products Unit cost 20X0 20X1Direct material $1.3Direct labor 1.5Variable factory overhead 0.2Standard variable manufacturing cost $3$3Total fixed factory o
19、verhead $150,000$150,000Production units 170,000 140,000 Unit fixed factory overhead $0.8821.071Unit product cost $3.882$4.071Ending inventory cost 30,000 3.882 10,0004.071Sales revenue ( 140,000 5 ) 700,000 cost of goods sold: Opening inventory 0 + cost of goods manufactured (170,000 3+ 150,000 ) 6
20、60,000 - ending inventory (30,000 3.882)116,520 cost of goods sold (140,000 3.882) 543,480Gross margin 156,520 Selling expenses 65,000 Selling commissions ( 5% of sales ) 35,000Operating income (variable costing ) 56,520Sales revenue ( 160,000 5 ) 800,000 cost of goods sold: Opening inventory (30,00
21、0 3.882) 116,460 + cost of goods manufactured (140,000 3+ 150,000 ) 570,000 - ending inventory (10,000 4.071)40,710 cost of goods sold (140,000 3.882) 645,750Gross margin 154,250 Selling expenses 65,000 Selling commissions ( 5% of sales ) 40,000Operating income (variable costing ) 49,250 Mellon Case
22、 Mellon Co. produces a single product with the following information availableNumber of units produced annually25,000 Variable costs per unit:Direct materials, direct labor and variable mfg. overhead10$ Selling & administrative expenses3$ Fixed costs per year:Mfg. overhead150,000$Selling & administr
23、ative expenses100,000$Absorption and Variable CostingUnit product cost is determined as follows: Absorption Costing Variable CostingDirect materials, direct labor, and variable mfg. overhead10$ 10$ Fixed mfg. overhead ($150,000 25,000 units)6 - Unit product cost16$ 10$ Absorption and Variable Costin
24、gSelling and administrative expenses are always treated as period expenses and deducted from revenue.Absorption Costing Income StatementsAbsorption CostingSales (20,000 $30)600,000$ Less cost of goods sold: Beginning inventory Add COGM Goods available for sale Ending inventoryGross marginLess sellin
25、g & admin. exp. Variable FixedNet incomeMellon Co. had no beginning inventory, produced 25,000 units and sold 20,000 units this year at $30 each.Absorption CostingSales (20,000 $30)600,000$ Less cost of goods sold: Beginning inventory-$ Add COGM (25,000 $16)400,000 Goods available for sale400,000$ E
26、nding inventory (5,000 $16)80,000 320,000 Gross margin280,000$ Less selling & admin. exp. Variable FixedNet incomeAbsorption Costing Income StatementsMellon Co. had no beginning inventory, produced 25,000 units and sold 20,000 units this year at $30 each.Absorption CostingSales (20,000 $30)600,000$
27、Less cost of goods sold: Beginning inventory-$ Add COGM (25,000 $16)400,000 Goods available for sale400,000$ Ending inventory (5,000 $16)80,000 320,000 Gross margin280,000$ Less selling & admin. exp. Variable (20,000 $3)60,000$ Fixed100,000 160,000 Net income120,000$ Mellon Co. had no beginning inve
28、ntory, produced 25,000 units and sold 20,000 units this year at $30 each.Absorption Costing Income StatementsVariable Costing Income StatementsVariable CostingSales (20,000 $30)600,000$ Less variable expenses: Beginning inventory-$ Add COGM Goods available for sale Ending inventory Variable cost of
29、goods sold Variable selling & administrative expenses Contribution marginLess fixed expenses: Manufacturing overhead Selling & administrative expensesNet incomeVariable Costing Income StatementsVariable CostingSales (20,000 $30)600,000$ Less variable expenses: Beginning inventory-$ Add COGM (25,000
30、$10)250,000 Goods available for sale250,000$ Ending inventory (5,000 $10)50,000 Variable cost of goods sold200,000$ Variable selling & administrative expenses Contribution marginLess fixed expenses: Manufacturing overhead Selling & administrative expensesNet incomeWe exclude thefixed manufacturingov
31、erhead.Variable CostingSales (20,000 $30)600,000$ Less variable expenses: Beginning inventory-$ Add COGM (25,000 $10)250,000 Goods available for sale250,000$ Ending inventory (5,000 $10)50,000 Variable cost of goods sold200,000$ Variable selling & administrative expenses (20,000 $3)60,000 260,000 Co
32、ntribution margin340,000$ Less fixed expenses: Manufacturing overhead150,000$ Selling & administrative expenses100,000 250,000 Net income90,000$ Variable Costing Income StatementsCost of Goods SoldEnding InventoryPeriod ExpenseTotalAbsorption costing Variable mfg. costs200,000$ Fixed mfg. costs120,0
33、00 320,000$Variable costing Variable mfg. costs200,000$ Fixed mfg. costs- 200,000$Comparing Absorption andVariable CostingLets compare the methods.Comparing Absorption andVariable CostingLets compare the methods.Cost of Goods SoldEnding InventoryPeriod ExpenseTotalAbsorption costing Variable mfg. co
34、sts200,000$ 50,000$ -$ Fixed mfg. costs120,000 30,000 - 320,000$ 80,000$ -$ Variable costing Variable mfg. costs200,000$ 50,000$ -$ Fixed mfg. costs- - 150,000 200,000$ 50,000$ 150,000$ Cost of Goods SoldEnding InventoryPeriod ExpenseTotalAbsorption costing Variable mfg. costs200,000$ 50,000$ -$ 250
35、,000$ Fixed mfg. costs120,000 30,000 - 150,000 320,000$ 80,000$ -$ 400,000$ Variable costing Variable mfg. costs200,000$ 50,000$ -$ 250,000$ Fixed mfg. costs- - 150,000 150,000 200,000$ 50,000$ 150,000$ 400,000$ Comparing Absorption andVariable CostingLets compare the methods.Reconciling Income Unde
36、r Absorption and Variable Costing We can reconcile the difference between absorption and variable net income as follows:Variable costing net income90,000$ Add: Fixed mfg. overhead costs deferred in inventory (5,000 units $6 per unit) 30,000 Absorption costing net income120,000$ Fixed mfg. overhead $
37、150,000 Units produced 25,000 = $6.00 per unit =Extending the ExampleLets look at the secondyear ofoperationsfor MellonCompany.Mellon Co. Year 2 In its second year of operations, Mellon Co. started with an inventory of 5,000 units, produced 25,000 units and sold 30,000 units at $30 each.Number of un
38、its produced annually25,000 Variable costs per unit:Direct materials, direct labor and variable mfg. overhead10$ Selling & administrative expenses3$ Fixed costs per year:Mfg. overhead150,000$Selling & administrative expenses100,000$Mellon Co. Year 2Unit product cost is determined as follows: Absorpt
39、ion Costing Variable CostingDirect materials, direct labor, and variable mfg. overhead10$ 10$ Fixed mfg. overhead ($150,000 25,000 units)6 - Unit product cost16$ 10$ There has been nochange in Mellonscost structure.Mellon Co. Year 2Now lets look at Mellons income statementassuming absorption costing
40、 is used.Absorption CostingSales (30,000 $30)900,000$ Less cost of goods sold: Beg. inventory (5,000 x $16)80,000$ Add COGM (25,000 $16)400,000 Goods available for sale480,000$ Ending inventory- 480,000 Gross margin420,000$ Less selling & admin. exp. Variable (30,000 $3)90,000$ Fixed100,000 190,000
41、Net income230,000$ Mellon Co. Year 2Units in ending inventory from the previous period.Absorption CostingSales (30,000 $30)900,000$ Less cost of goods sold: Beg. inventory (5,000 x $16)80,000$ Add COGM (25,000 $16)400,000 Goods available for sale480,000$ Ending inventory- 480,000 Gross margin420,000
42、$ Less selling & admin. exp. Variable (30,000 $3)90,000$ Fixed100,000 190,000 Net income230,000$ Mellon Co. Year 225,000 units produced in the current period.Mellon Co. Year 2Next, well look at Mellons income statementassuming is used.Mellon Co. Year 2Variable CostingSales (30,000 $30)900,000$ Less
43、variable expenses: Beg. inventory (5,000 $10)50,000$ Add COGM (25,000 $10)250,000 Goods available for sale300,000$ Ending inventory- Variable cost of goods sold300,000$ Variable selling & administrative expenses (30,000 $3)90,000 390,000 Contribution margin510,000$ Less fixed expenses: Manufacturing
44、 overhead150,000$ Selling & administrative expenses100,000 250,000 Net income260,000$ Variable CostingSales (30,000 $30)900,000$ Less variable expenses: Beg. inventory (5,000 $10)50,000$ Add COGM (25,000 $10)250,000 Goods available for sale300,000$ Ending inventory- Variable cost of goods sold300,00
45、0$ Variable selling & administrative expenses (30,000 $3)90,000 390,000 Contribution margin510,000$ Less fixed expenses: Manufacturing overhead150,000$ Selling & administrative expenses100,000 250,000 Net income260,000$ Mellon Co. Year 2Excludes fixed manufacturing overhead.SummaryIn the first perio
46、d, production (25,000 units)was greater than sales (20,000).Income ComparisonCosting Method1st Period2nd PeriodTotalAbsorption120,000$ 230,000$ 350,000$ Variable90,000 260,000 350,000 In the second period, production (25,000 units)was less than sales (30,000).SummaryFor the two-year period, total ab
47、sorptionincome and total variable income are the same.Income ComparisonCosting Method1st Period2nd PeriodTotalAbsorption120,000$ 230,000$ 350,000$ Variable90,000 260,000 350,000 SummaryLets see if we can get an overview of what we have done.Summary Comparison of Absorption (AC) and Variable Costing
48、(VC)Production versus SalesTotal Inventory EffectPeriod Expense EffectProfit EffectFixed mfg.Fixed mfg.Produced SoldIncreasecosts expensed VCACVCFixed mfg.Fixed mfg.Produced costs expensedAC SoldIncreasecosts expensed VCACVCFixed mfg.Fixed mfg.Produced costs expensedAC SoldIncreasecosts expensed VCA
49、CVCFixed mfg.Fixed mfg.Produced costs expensedAC SoldIncreasecosts expensed VCACVCFixed mfg.Fixed mfg.Produced costs expensedAC VCACVCFixed mfg.Fixed mfg.Produced = SoldNo changecosts expensed = costs expensedAC = VCACVCSummary Comparison of Absorption (AC) and Variable Costing (VC)For the two-year
50、period, units produced equals units sold, so total absorption incomeequals total variable income.Cost-Volume-Profit Analysis CVP includes all fixed costs to compute breakeven. Variable costing and CVP are consistent as both treat fixed costs as a lump sum. Absorption costing defers fixed costs into
