COMMERCE 2AB3 Lecture Notes - Lecture 9: Total Absorption Costing, Variable Cost, Income Statement
26 Jun 2018
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CHAPTER 9 – CLASS NOTES
#1-6 – CLASS EXAMPLES – of which 3 will be on the midterm with small changes.
1. True –
You can either track them – DM Both of these are variable.
You don’t track them – VMOH
2. Glue, paint, nails = DM or VMOH = Both are product costs
True
3. False – Manufacturing Supervisor’s Salary = product for AC, period for AC
4. False – Sales Salary = FS&A = period
All selling costs are always period.
5. True – VMOH falls under product costs.
Variable Costs: DM, DL, VMOH are always product costs on Absorption and
Variable Costing.
6. Overtime premium = based on hours, variable
Fault of Customer – DL
Fault of Company –DL or VMOH
These 3 items are always product under AC and VC.
Harvey Company
Produced 25,000 units, and sold only 20,000 units at $30/unit.
DL, DM, VMOH = $10
S&A = $3
FMOH = $150,000
FS&A = $100
AC
COGM = BB + DM + DL + VMOH + FMOH – EB = COGM
0 150K 0 = 400,000 for 25,000 units = 16/unit
Calculate COGS
FG = BB + COGM - EB = COGS
0 400,000 16x5000 16x20,000 = 320,000
AC – Income Statement
Sales (20,000 x 30) DM, DL , VMOH = 10 x 20,000 FMOH = 6 x 20,000
- COGS (320,000)
Gross Margin (280,000)
- Period Expenses (VS&A – 3x20,000 sold FS&A (100,000)
Operating Income for AC (120,000)
VC
COGM = 250,000 for 25,000 units = $10/unit
FG = BB + COGM – EB = COGS
0 250,000 10x5000 10x20,000 = 200,000
VC – Income Statement
Sales (30x20,000)
find more resources at oneclass.com
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Document Summary
#1-6 class examples of which 3 will be on the midterm with small changes: true . You can either track them dm both of these are variable. You don"t track them vmoh: glue, paint, nails = dm or vmoh = both are product costs. True: false manufacturing supervisor"s salary = product for ac, period for ac, false sales salary = fs&a = period. All selling costs are always period: true vmoh falls under product costs. Variable costs: dm, dl, vmoh are always product costs on absorption and. Variable costing: overtime premium = based on hours, variable. These 3 items are always product under ac and vc. Produced 25,000 units, and sold only 20,000 units at /unit. Cogm = bb + dm + dl + vmoh + fmoh eb = cogm. 0 150k 0 = 400,000 for 25,000 units = 16/unit. Fg = bb + cogm - eb = cogs.
