金陵科技学院-管理会计（双语）管理会计Lecture 7课堂习题答案.docVIP

AYB225 SOLUTIONS, PRACTICE QUESTIONS, LECTURE 7 Note: Direct Costing (DC) is an alternative name for Variable Costing (VC) QUESTION 2 Working - Calculation of units produced = Opening inventory 85,000 + production ? (this figure must be 294,900) - sales 345,400 = closing inventory 34,500 F OH per unit = $1,440,000/6,000 x 50 = $4.80 Calculation of F OH Volume Variance (shown in terms of 4 variance columns): Column 1 Column 2 Column 3 Column 4 Flexible Budget OH Applied $1,440,000 294,900 x $4.80 $1,415,520 Volume variance = $24,480 U (Both actual and budgeted fixed overhead is $1,440,000 because the question tells you that the spending (price) variances are zero.) Income Statement - Absorption Costing Sales (345,400 x $22) 7,598,800 Less Cost of goods sold: 345,400 x $9.90 ($5.10+$4.80) 3,419,460 Adjustment for variances 24,480 3,443,940 GROSS PROFIT 4,154,860 Less Selling, admin, financing costs: Variable ($1.10 per unit x 345,400 units) 379,940 Fixed 1,080,000 1,459,940 NET PROFIT 2,694,920 Income Statement - Variable Costing Sales 7,598,800 Less Variable costs: COGS 345,400 x $5.10 1,761,540 Adjustment for variances (told variable are zero) 0 Selling, admin, financing costs ($1.10 x 345,400) 379,940 2,141,480 CONTRIBUTION MARGIN 5,457,320 Less fixed costs: Overhead 1,440,000 Selling, admin, financing 1,080,000 2,520,000 NET PROFIT 2,937,320 Explanation of difference in profit Difference in profit = $2,937,320 – $2,694,920 = $242,400. Change in inventory x F OH per unit = (85,000 – 34,500) x $4.80 = $242,400 Because inventory has decreased, profit will be higher under Variable Costing by $242,400. This is because AC releases to expenditure an amount of F OH related to all units sold. Therefore AC will be releasing to expenditure F OH related to the units produced this period, plus some fixed OH held back in inventory in the previous period. Consequently, wh