+1-415-670-9189
info@expertsmind.com
Difference between absorption costing and variable costing
Course:- Managerial Accounting
Reference No.:- EM132231824




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

Question 1
What is the basic difference between absorption costing and variable costing?

Question 2
Refined Elegance Corp. makes a desk specially designed for personal computers. The desk sells for $200.

Data for last year's operations follow:

Units in beginning inventory

0

Units produced

10,000

Units sold

9,000

Units in ending inventory

1,000

Variable costs per unit

 

Direct materials 

$40

Direct labour

35

Variable manufacturing overhead 

10

Variable selling and administrative

25

Total variable cost per unit 

$110

Fixed costs

 

Fixed manufacturing overhead  

$300,000

Fixed selling and administrative

450,000

Total fixed costs  

$750,000

Assume that the company uses variable costing. Compute the unit product cost for one computer desk.

Assume that the company uses variable costing. Prepare a contribution format income statement for the year.

What is the company's break-even point in terms of units sold?

Question 3
Refer to the data in the previous question for Refined Elegance Corp. Assume in this exercise that the company uses absorption costing.
Compute the unit product cost for one computer desk.

Prepare an income statement for the year.

Question 4
The following information pertains to Death Star Corporation for a period

Selling price per unit

$41

Standard fixed manufacturing costs per unit

$20

Variable selling and administrative costs per unit

$4

Fixed selling and administrative cost per unit

$16,000

Beginning inventories:

 

          Units

?

          Standard fixed manufacturing cost

$40,000

          Standard variable manufacturing cost

$20,000

          Units produced

10,000

          Units sold

9,600

Assume the unit standard costs data for the beginning and ending inventories remained constant during the period. What was the total standard cost of the ending inventory under absorption costing?

Question 5

Algonquin Outfitters Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

$111

 

 

Units in beginning inventory

400

Units produced

8,800

Units sold

8,900

 

 

Variable costs per unit

 

          Direct materials

$34

          Direct labour

$37

          Variable manufacturing overhead

$3

          Variable selling and administrative

$9

 

 

Fixed costs

 

          Fixed manufacturing overhead

$61,600

          Fixed selling and administrative

$169,100

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Compute the total Contribution Margin.

Compute the Operating Income under Variable Costing.

Prepare a reconciliation from your Variable Costing Operating Income to compute Operating Income under absorption costing.

Answered:-

Verified Expert

In the given assignment we were required to solve the questions based on variable costing and absorption costing method to determine the cost per unit, contribution margin and break-even sales of the commodities.



Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
View of the managing director of AB Company, what price should Division B charge for XK120, and what volume should be sold in order to maximise return on investment for the
With possibility that the US Congress will relax restrictions on cutting old growth, a local lumber company is considering expanding its facilities. They can sell the lumber
Review the 2014 Statement of Cash Flow budget. Based on your research, write a report that indicates whether you believe the cash from operations will increase or decrease.
Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge the retailer for the All-Body swimsuit? What is the highest acceptable manufactur
Use the information in the following table to compute each department's contribution to overhead (both in dollars and as a percent). Which department contributes the largest d
Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours requir
Calculate the material handling rate that would have been used by Eloise Smith's predecessor at East Coast Marine - calculate the revised material handling costs to be allocat
Your firm has a debt-equity ratio of .40. Your cost of equity is 12% and your after-tax cost of debt is 6%. What will your cost of equity be if the target capital structure