Chapter 6: Variable Costing & Segmented Reporting Flashcards
Variable Costing- Product
Direct Materials, Direct Labor, Variable MOH
Variable Costing- Period
Fixed MOH, Variable Selling and Admin Expense, Fixed Selling and Admin Expense
Absorption Costing- Product
Direct Materials, Direct Labor, Variable MOH, Fixed MOH
Absorption Costing- Period
Variable Selling and Admin Expense, Fixed Selling and Admin Expense
Price per Unit
Fixed MOH/ Units Produced
All FMOH is expensed
immediately
When Units produced=Units sold
No change in inventory, absorption income= variable income
When Units produced > Units sold
Inventory increases, absorption income> variable income
HINT: More produced— more fixed costs
When Units produced < Units sold
Inventory decreases, absorption income < variable income HINT: with less inventory, less fixed costs
Segment
any part or activity of an organization about which a manager seeks revenue or profit data. Ex. Service center, individual store, sales territory.
Segmented Income Statement uses what format __
Contribution Format- separates fixed/variable costs, enables the calculation of CM
Common fixed costs
Arise because the overall operations of the company would not disappear if any particular segment were eliminated.
Traceable fixed costs
Costs that their only reason for existence is that segment
Traceable fixed costs of one segment may ___
be common fixed costs of another segment
Segment Margin=
= Traceable FC of segment- C Margin