BUS 202 Lecture 14: March 1st
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Department
BUS - Business Administration
Course Code
BUS 202
Professor
Nick Ross

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March 1st Wednesday, March 1, 2017 9:15 AM Continued: • Absorption costing is required by the sec(all manufacturing costs are product cost) • If units sold = units produced the absorption N.I. will equal variable cost Net income • If units sold < units produced > absorption costing N.I. > variable cost net income • If units sold > units produced > absorption costing N.I. < variable cost net income • Ricky: ○ PRICE $60 ○ Varaible cost $35 ○ DM $25 ○ Dl $15 VMOH $5 ○ ○ VSG&A 2 ○ Fixed cost: § MOH $250,000/yr § SG&A $80,000/yr ---- Yr 1 Yr2 Beg 0 $10,000 ○ Produced 50,000 40,000 Sold 40,000 50,000 End 10,000 0 ○ Q1) what is the product cost under variable costing each year --- Y1 Y2 Dm 25 25 § Dl 15 15 Moh 5 5 Total 45 45 ○ Q2) what is the product cost uabsorptioncosting each year ---- Y1 Y2 DM 25 25 DL 15 15 § March 1st Wednesday, March 1, 2017 9:15 AM Continued: • Absorption costing is required by the sec(all manufacturing costs are product cost) • If units sold = units produced the absorption N.I. will equal variable cost Net income • If units sold < units produced > absorption costing N.I. > variable cost net income • If units sold > units produced > absorption costing N.I. < variable cost net income • Ricky: ○ PRICE $60 ○ Varaible cost $35 ○ DM $25 ○ Dl $15 VMOH $5 ○ ○ VSG&A 2 ○ Fixed cost: § MOH $250,000/yr § SG&A $80,000/yr ---- Yr 1 Yr2 Beg 0 $10,000 ○ Produced 50,000 40,000 Sold 40,000 50,000 End 10,000 0 ○ Q1) what is the product cost under variable costing each year --- Y1 Y2 Dm 25 25 § Dl 15 15 Moh 5 5 Total 45 45 ○ Q2) what is the product cost uabsorptioncosting each year ---- Y1 Y2 DM 25 25 DL 15 15 § ○ Q2) what is the product cost uabsorptioncosting each year ---- Y1 Y2 DM 25 25 DL 15 15 § VMOH 5 5 FMOH 250,000/50,000=5 250,000/40,000=6.25 Total: 25+15+5+5=50 25+15+5+ 6.25=51.25 Q3) Create an income statement under variable costing ○ ---- Y1 Y2 Sales 2400k 3000k Variable Expenses1800+80=1880k 2250+100=2350 k Cogs/product SG&A
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