Variable vs Absorption Costing A Tool for Management变量与吸收的管理成本的工具.pptVIP

Variable vs. Absorption Costing: A Tool for Management Chapter Seven Overview of Absorptionand Variable Costing Quick Check ? Which method will produce the highest values for work in process and finished goods inventories? a. Absorption costing. b. Variable costing. c. They produce the same values for these inventories. d. It depends. . . Quick Check ? Which method will produce the highest values for work in process and finished goods inventories? a. Absorption costing. b. Variable costing. c. They produce the same values for these inventories. d. It depends. . . Unit Cost Computations Harvey Company produces a single productwith the following information available: Unit Cost Computations Unit product cost is determined as follows: Income Comparison ofAbsorption and Variable Costing Let’s assume the following additional information for Harvey Company. 20,000 units were sold during the year at a price of $30 each. There were no units in beginning inventory. Now, let’s compute net operatingincome using both absorptionand variable costing. Absorption Costing Variable Costing Income Comparison ofAbsorption and Variable Costing Reconciliation Extended Comparison of Income Data Harvey Company Year Two Unit Cost Computations Absorption Costing Variable Costing Reconciliation Income Comparison Summary Effect of Changes in Productionon Net Operating Income Effect of Changes in ProductionHarvey Company Year One Unit Cost Computations for Year One Unit product cost is determined as follows: Absorption Costing: Year One Variable Costing: Year One Effect of Changes in ProductionHarvey Company Year Two Unit Cost Computations for Year Two Unit product cost is determined as follows: Absorption Costing: Year Two Variable Costing: Year Two Income Comparison Impact on the Manager CVP Analysis, Decision Makingand Absorption costing Absorption costing does not support CVP analysis because it essentially treats fixed manufacturing overhead as a va