商洛学院经济与管理学院管理会计课件Chapter 4 Variable Costing-A Tool for Management.pptVIP

7-* * In the first year, Harvey Company produces 30,000 units and sells 25,000 units. There is no beginning inventory. The selling price per unit, variable costs per unit, and total fixed costs remain unchanged from the prior example. 7-* * The unit product costs under absorption and variable costing are $15 and $10, respectively. Note that the fixed manufacturing overhead cost per unit has declined from $6 in the previous example to $5 in this example. Since the number of units produced increased to 30,000 in this example, and the fixed manufacturing overhead remained the same, the unit cost is less. 7-* * Harvey sold only 25,000 of the 30,000 units produced, leaving 5,000 units in ending inventory. At a sales price of $30 per unit, sales revenue for the 25,000 units sold is $750,000. At a unit product cost of $15, cost of goods sold for the 25,000 units sold is $375,000. Subtracting cost of goods sold from sales, we find the gross margin of $375,000. After subtracting selling and administrative expenses from the gross margin, we see that net operating income is $200,000. 7-* * Now, let’s examine a variable cost income statement prepared in the contribution format. First, we subtract all variable expenses from sales to get contribution margin. At a product cost of $10 per unit, the variable cost of goods sold for 25,000 units is $250,000. The next variable expense is the variable selling and administrative expense. After computing contribution margin, we subtract fixed expenses to get the $175,000 net operating income. Note that all $150,000 of fixed manufacturing overhead is expensed in the current period. 7-* * In the second year, Harvey Company again sells 25,000 units, but produces only 20,000. Five thousand units are in beginning inventory, left from last year. The selling price per unit, variable costs per unit, and total fixed costs remain unchanged. 7-* * The unit product costs for the second year under absorption and variable costin