Managerial Accouting LS CH 6.

Under both variable costing and absorption costing, variable and fixed selling and admnistrative costs are treated as_____ costs

product

pg 244 absorption costing treats fixed manufacturing overhead as a _______ cost

product

contribution format income statement

sales variable exp contribution margin fixed exp net op income

Income statement construction

sales - total cost of goods sold = gross margin - total selling and administrative costs = net operating income

What is the contribution margin formula

selling price * variable production costs -variable selling and admin exspenses per =contribution margin

The number of units produced does not affect net operating income when using _____ costing

variable

PG 251 absorption costing net income is equal to variable costing net income---??

when the number of units produced equals the number of units sold.

pg 251 Absorption costing and variable costing net operating income will be equal when???

when the number of units produced equals the number of units sold. There is no beggining and no ending inventory

PG 254Under variable costing the cost of a unit of inventory does not contain:

fixed manufacturing overhead

Variable costing

fixed manufacturing overhead is treated as a period cost and exspnesed in full each period

absorption costing variable costing

fixed manufacturing overhead is treated as part of the per unit product cost and expensed as units are sold fixed manufacturing overhead is treated as a period cost and exspensed in full each period

Absortion Costing

fixed manufacturing overhead is treated as part of the per unit product cost and exspnesed as units are sold

Blink sells and manufactures frames for eyeglasses. The unit product cost for frame $47320 is 76.35. Last period, blink produced 200 frames and sold 155 of them. Total cost of goods sold equalsÑ

$76.35 x 155 actual sold = $11.834.25

Contribution format income statement formation:(5)

1. sales 2. variable cost 3. contribution margin 4. fixed expense 5. Net operating income

Income statement in order 5)

1.sales 2. (-) total cost of good sold 3. = gross margin 4. (-) total selling and administrative costs = net operating income

pg 254 why is CVP analysis more difficult when using absorption costing than when using variable costing?

CVP analysis requires costs to be broken down between variable and fixed which is not done in absoption costing

The variable net operating income fr each period can always be calcualted by multiplying the number of units sold by the _________________ margin, and then septracting - total fixed costs

contribution #units sold x contribution margin - total fixed costs

Absorption costing method

direct materials +direct labor variable +manufacturing overhead(SUM) + fixed manufacturing overhead / units produced per month =### + SUM = absorption costing unit product cost

A common fixed cost

is a fixed cost that supports the operations of more than one segment, but is not traceable in whole or in part to any one segment.

Segment Margin

is obtained by deducting the traceable fixed costs of a segment from segments contribution margin.

absortion costing and variable costing net operating income will be equal when

the number of units produced equals the number of units sold there is no beginning and no ending inventory

PG 267 when computing a segment margin, only ______ fixed costs are charged to the particualr segment

traceable

when the number of units produced equals the number of units sold?

under both absorption costing and variable costing, all fixed overhead incurred flows to the income statement absorption costing net income is equal to variable costing net incom