COMM 1102 Lecture Notes - Lecture 8: Total Absorption Costing, Net Income, Income Statement
15 Oct 2018
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Chapter 8: variable costing: a tool for management. Income statements: traditional and contribution format - net income will not be the same. Reconcile - why the net incomes do not agree. Unit costs under absorption costing will always be higher than the variable costing. When reconciling - the ending inventory will cause the differences in the income statements. When you look at the manufacturing overhead - it is the amount it took to make the products. Identify why the 2 net incomes are different. Costs either end up on the balance sheet or the income statement. If you put more costs on the income statement, the net income will be less. If you put more costs on the balance sheet, the net income will be higher. Ends up in the cost of goods manufactured - goes into inventory to start. When they are sold, they go into cost of goods sold. Ending inventory - causes the difference in net income.
