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Kelompok 7

Chapter 15:
Segmented Reporting
and Performance
Evaluation

Afif Khairi
Billinardo Eri Saputra
Yudha Nandatama

Variable Costing and Absorption


Costing : An analysis and Comparison
Variable Costing assigns only variable
manufacturing costs to the product.
Direct materials
Direct labor

Variable overhead

Variable Costing and Absorption


Costing : An analysis and Comparison
Absorption costing assigns all
manufacturing costs to the product; this
adds fixed overhead to the formula.
Direct materials

Direct labor
Variable overhead

Fixed overhead

Inventory Valuation
Units in beginning inventory
Units produced
Units sold ($300 each)
Normal volume
Variable cost per unit :
Direct Materials
Direct labors
Variable Overhead
Variable Selling & Administrative
Fixed costs:
Fixed overhead
Fixed selling and administrative

--10,000
8,000
10,000
$50
$100
$50
$10
$250,000
100,000

Unit Cost
Variable
costing

Direct materials
Direct labor
Variable overhead
Fixed overhead
Total

$ 50
100
50
$200

Absorption
costing

$ 50
100
50
25
$225

Fairchild Company
Variable-Costing Income Statement
Sales
$2,400,000
Less variable expenses:
Variable cost of goods sold $1,600,000
Variable selling and admin.
80,000 1,680,000
Contribution margin
$ 720,000
Less fixed expenses:
Fixed overhead
$ 250,000
Fixed selling and admin.
150,000
350,000
Net income
$ 370,000

Fairchild Company
Absorption-Costing Income Statement
Sales
Less: Cost of goods sold
Gross margin
Less: Selling and administrative exp.
Net income

$2,400,000
1,800,000
$ 600,000
180,000
$ 420,000

Production, Sales, and


Income Relationships
If
Production > Sales
Production < Sales
Production = Sales

Then
Absorption NI > Variable NI
Absorption NI < Variable NI
Absorption NI = Variable NI

Example
To illustrate these relationship consider the example
based on the operating Data for Belnip, Inc., for years
2002, 2003, and 2004 follows:
Variable cost per unit:
Direct materials
Direct labor
Variable overhead (estimated and actual)
Variable selling and administrative

$4.00
1.50
0.50
0.25

Estimated fixed overhead was $150,000 each year.


Normal production was 150,000 units and the sales
price was $10. Fixed selling and administrative
expenses were $50,000 per year.

Other operating data were as follows:


2004
Beginning Inventory
Production
Sales
Ending Inventory

150,000
150,000
-

2005

2006

150,000
100,000
50,000

50,000
150,000
200,000
-

Variable-Costing Income
Statements
2004
Sales

2005

2006

$1,500.0

$1,000

$2,000

Variable cost of goods sold

(900.0)

(600)

(1,200)

Variable selling and admin

(37.5)

(25)

(50)

$562.5

$375

$750

(150)

(150)

(150)

(50)

(50)

(50)

$362.5

$175

$550

Less variable expenses:

Contribution margin
Less fixed expenses:
Fixed overhead
Fixed selling and admin
Net Income

Variable-Costing Income
Statements (cont)
Beginning Inventory
Variable cost of goods manufactured
Goods available for sale
Less: Ending Inventory
Variable costs of goods sold
$0,25 per unit x units sold

$900
$900
$900

$900
$900
$300
$600

$300
$900
$1200
$1200

Absorption-Costing Income
Statements
2004
Sales
Less: Cost of goods sold
Gross margin
Less: Selling and admin. exp.
Net income
Beginning Inventory
Cost of goods manufactured
Goods available for sale
Less: Ending Inventory
Variable costs of goods sold

2005

2006

$1,500.00 $1,000 $2,000


(1,050.00)
(700) (1,400)
$ 450.00 $ 300 $ 600
87.50
75
100
$ 362.50 $ 225 $ 500
$1050 $1050
$1050 $1050
$350
$1050 $ 700

$350
$1050
$1400
$1400

Absorption costing income Variable


costing income = Fixed overhead x
(Units produced Units sold)
2006

$500,000 $550,000 = $1 x
(150,000 200,000)

Variable Costing and Performance


Evaluation of Managers

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