b Variable
costing
April 2011 May 2011 Profit a
€12,480,000 Cost of goods sold Opening stock
€ 0
€2,100,000 Variable manufacturing costs b 5,000,000 4,000,000 Fixed manufacturing costs c 2,000,000 2,000,000 Cost of goods available for sale
7,000,000 8,100,000 Closing costs d 2,100,000 450,000 Cost of goods sold
4,900,000 7,650,000 Gross margin
3,500,000 4,830,000 Marketing costs Variable marketing costs e 1,050,000 1,560,000 Fixed marketing costs
600,000 600,000 Total marketing costs
1,650,000 2,160,000 Operating profit
€1,850,000
€2,670,000 ab c × 500; €5,000 × 400 deb
(
) (Absorption costing
Variable costing
–
operating income operating income = Fixed manufacturing
Fixed manufacturing cost in
–
cost in closing stock opening costs
April
€1,850,000
− €1,250,000 = (€4,000
× 150) − (€0)
€600,000
=
€600,000 May
€2,670,000
− €3,120,000 = (€5,000
× 30) − (€4,000 × 150)
− €450,000 = €150,000 − €600,000
−€450,000 = −€450,000 The difference between absorption and variable costing is due solely to moving fixed manufacturing costs into stocks as stocks increase (as in April) and out of stocks as they decrease (as in May.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 7.18 Share with your friends: |
