Variable and absorption costing, explaining operating profit differences.
(30 min)
1
Key inputs for profit statement calculations are
April May
Opening stock Production Goods available for sale Units sold Closing stock
0 500 500 350 150 150 400 550 520 30 The unit fixed and total manufacturing costs per unit under absorption costing are
April May
(a) Fixed manufacturing costs b) Units produced cab) Unit fixed manufacturing costs d) Unit variable manufacturing costs e) = (c) + (d) Unit total manufacturing costs
€2,000,000 500
€4,000
€10,000
€14,000
€2,000,000 400
€5,000
€10,000
€15,000
a Variable
costing
April 2011 May 2011 Profits a €8,400,000
€12,480,000 Variable costs Opening stock
€ 0
€1,500,000 Variable cost of goods manufactured b 4,000,000 Cost of goods available for sale
5,000,000 5,500,000
Closing stock c 300,000 Variable manufacturing cost of goods sold 3,500,000 5,200,000 Variable marketing costs
1,050,000 1,560,000 Total variable costs
4,500,000 6,760,000 Contribution margin
3,850,000 5,720,000 Fixed costs Fixed manufacturing costs
2,000,000 2,000,000 Fixed marketing costs
600,000 600,000 Total fixed costs
2,600,000 2,600,000 Operating profit
€1,250,000
€3,120,000 ab c €10,000 × 150; €10,000 × 30
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |
