管理会计(双语)-3.pptVIP

Chapter 3 Marginal costing and absorption costing Chapter contents: 1.absorption costing: content and advantages 2.marginal costing: content and advantages 3. Differences of stock valuation and profit between marginal costing and absorption costing 1. Absorption costing: Fixed production overheads are absorbed into cost units Profit statement under absorption costing Advantages of absorption costing Profit statement under absorption costing Item Amount Sales Less:costs of sales Operating profit Less: Admini. overhead Selling overhead Net profit Advantages of absorption costing 1.stock valuation 2.pricing 3.follows the matching concept 4.under/over-absorption analysis 5.prepare standard statement 2. Marginal costing: Fixed production overheads are not absorbed into cost units and treated as period costs Profit statement under marginal costing Advantages of marginal costing Profit statement under marginal costing Contribution Advantages of marginal costing More relevant and appropriate for short-term decision-making than absorption costing Fixed costs are treated in accordance with their nature, i.e. as period costs. Profit depends on sales as opposed to production activity levels and is hence more appropriate for performance evaluation. Disadvantages Does not comply with GAAP Costs must be analysed into fixed and variable parts. Fixed costs cannot be ignored in the long?run. 3. Differences of stock valuation and profit between marginal costing and absorption costing Basic rule: Note: value not volume Exercise: 1.When opening stocks were 8,500 litres and closing stocks 6,750 litres, a firm had a profit of ￡62,100 using marginal costing. Assuming that the fixed overhead absorption rate was ￡3 per litre, what would be the profit using absorption costing? A ￡41,850 B ￡56,850 C ￡67,350 D ￡82,250 2.In a period, opening stocks were 12,600 units and closing stocks 14,100 units. The profit, based on margin