COMM 294 Lecture Notes - Lecture 20: Earnings Before Interest And Taxes, Total Absorption Costing, Fixed Cost
Document Summary
Comm 294, variable costing vs. absorption costing (chapter 8) Also called direct costing or marginal costing . Usually as a period cost under both absorption and variable costing systems these costs do not accumulate in inventory. For external reporting. i. e. nancial accountingdm + dlallocate fmoh and vmohgaap ifrscomparing the two methods. Variable and fixed costs are as follows: Number of units produced annually. Fixed moh (,000 25,000 units) Absorption costing variable costing. Ending inventory (5,000 x ) Add cogm (25,000 x ) Less ending inventory (5,000 x ) Variable selling & admin expenses (20,000 x ) 16given16( )1010comparing the two methods. Variable selling & admin costs. Fixed selling & admin costs. Add: fixed moh _________________ inventory. Deferred to variable costingabsorption costingoperating income#5000 * = ,000extended comparison of the two methods. Less selling & admin expenses. Opening inventory (5,000 x ) Add cogm (25,000 x ) Variable cost of goods sold. Variable selling & admin expenses (30,000 x )
