金陵科技学院-管理会计（双语）Lecture 7.pptVIP

6. Lecture exemple Lecture exemple 1 * * 6. Lecture exemple INVENTORIABLE COST (PRODUCT COST) PER UNIT VALUATION OF INVENTORIES AND COST OF GOODS SOLD HOW FIXED OVERHEAD IS EXPENSED VARIANCES CALCULATED * 6. Format of Income Statement Income Statement – Standard Absorption Costing * Income Statement – Standard Variable Costing * 6. Format of Income Statement 7. Profit under VC and AC RECONCILING PROFIT DIFFERENCES AC/VC * When sales ≠ production, there will be a difference in profit under 2 costing systems. For AC, opening inventory reduces profit; closing inventory increases profit. 7. Profit under VC and AC General Rule – Relationship between AC profit and VC profit * 7. Profit under VC and AC Short-Cut Rule The amount of profit difference ($693,250 - $692,050 = $1,200) can be calculated as follows: The direction of the difference: If inventory has increased (production exceeds sales), AC profit will be greater than VC profit. If inventory has decreased (sales exceeds production), VC profit will be greater than AC. Where production equals sales, VC profit will equal AC profit. * 8. The extended variance report Variance Report (Extended Format ) Prepare the Income Statement under VC ?Variance report of costs related to the number of units produced ; ?Income Statements, however, show the firm’s income generated from the number of units sold. Limitations: * For firms where units produced = units sold Lecture exemple 2: Assume the following budget and actual data for a firm. Prepare a variance report in contribution margin format, clearly indicating the variances due to sales price/cost, and those due to volume. * 8. The extended variance report * LECTURE 7 ABSORPTION AND VARIABLE STANDARD COSTING 1.INTRODUCTION In this lecture you will: Learn the difference between the two systems Be able to prepare and compare Income Statements under both AC and VC Learn to prepare the contribution margin format (variable costing) Income Statemen