VARIABLE and ABSORPTION COSTING Flashcards
TRUE OR FALSE:
All variable costs are product costs in Variable Costing.
False
TRUE OR FALSE:
All fixed costs are period costs in Variable Costing
True
In absorption costing, how do you find the net operating income
Sales
Less: DM
Less: DL
Less: FOH
Less: MOH
————–
Gross Profit
Less: OPEX
————-
Net Operating Income
In variable costing, what is the format for the income statement?
Sales
Less: Variable Costs
—————
Contribution Margin
Less: Fixed Costs
——————-
NOI
Notes: Base on UNITS SOLD ALONE.
In throughput costing, what is the format for the income statement?
Sales
Less: Variable Cost (Direct Materials)
—————
Throughput Margin
Less: Everything else
——————-
NOI
Notes: Base on BOTH UNITS SOLD AND PRODUCED.
How do you find the difference between the Absorption Costing and Variable Costing without using the income statement?
Difference lies in FMOH:
Fixed Manufacturing Overhead
Divide: Units Produced
————————-
FMOH per unit
Multiply: Units in FG, end (EI)
————————-
Difference between Absorption and Variable Costing
Difference: timing. Madedefer lang yung FOH until masell lahat.
If sold units > produced units, which among Absorption Costing and Variable Costing is higher?
Variable is higher.
Variable > Absorption
Variable costing is based on sold units.
If sold units < produced units, which among Absorption Costing and Variable Costing is higher?
Absorption is higher.
Variable < Absorption
Variable costing is based on sold units.
These are costs that are constant in total
Fixed Costs
How do you find Breakeven Point in Peso under Variable Costing?
BEP = Fixed Costs / CM ratio
How do you find Breakeven Point in Units under Variable Costing?
BEP = Fixed Costs / CM per Unit
How do you find the target sales in peso under variable costing?
TP = (Fixed Costs + NI) / CM ratio
How do you find the target sales in units under variable costing?
TP = (Fixed Costs + NI) / CM per unit
How do you find the margin of safety in peso?
MOS = Sales - Breakeven Point
How do you find the margin of safety in units?
MOH = Sales Volume - Breakeven Point in units
How do you find the MOS ratio?
MOS ratio = MOS / Sales
Note: In total.
How do you find the Degree of Operating Leverage?
DOL = CM / NOI
How do you find the % change in net operating income?
% Change in NOI = % Change in Sales x DOL
DOL = CM / NOI
How do you find the breakeven point under absorption costing (in units)?
BEP units = (TFC * FOH(BEP Units - Units Produced)) / CM per Unit
