Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Comparison of actual costing methods

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7.11
Comparison of actual costing methods.
(20–30 min) The numbers are simplified to ease calculations. This problem avoids standard costing and its complications.
1 ab Variable-costing profit statements

Year 1
Year 2
Sales
1,000 units
Sales
1,200 units
Production 1,400 units Production 1,000 units
Profit (€3 per unit) Variable costs
Opening stock Variable cost of goods manufactured Cost of goods available for sale
Closing stocka

€0 700 700 200
€3,000
€200 500 700 100
€3,600 Variable manufacturing cost of goods sold
Variable marketing and admin. costs
Variable costs Contribution margin Fixed costs Fixed manufacturing costs Fixed marketing and admin. costs
Fixed costs Operating profit
500 1,000

700 400

1,500 1,500

1,100
€400 600 1,200

700 400

1,800 1,800

1,100
€700 a Unit stockable costs Year 1: €700 ÷ 1,400 = €0.50 per unit Year 2: €500 ÷ 1,000 = €0.50 per unit

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012

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