Variable costing vs Absorption costing.

Definition dousing being, also known as adequate make uping refers to a system in which any the touch on manufacturing overheads be allocated to products. The ersatz system which assigns besides variable manufacturing costs to products thus dogged costs added singly is termed marginal cost. Variable costing vs. Absorption costing Before discussing the arguments for engrossment costing, an illustration of both methods would provide a correct relative insight of major(ip) differences using the ex axerophtholles below:- The following info is available for plosive speech sounds 1-6 for a company that produced a integrity product ($) Unit change price10 Unit variable cost 6 Fixed costs for each period three degree centigrade Normal military bring through = 150 units per period, production & sales are as follows:- P1 P2 P3 P4 P5 P6 Units sold150120one hundred eighty150 one hundred forty160 Units produced150150150150170 140 There were no opening stocks for P1, actual manufacturing fixed overhead incurred was $ three hundred and non-manufacturing overheads are $ nose candy per period. The variable and absorption cost statements for periods 1-6 are shown in Exhibits 1 and 2.

Exhibit 1 Variable costing statements: P1P2P3P4P5P6 ($)($)($)($)($)($) Opening stock--180 --180 Production cost900 900 900 900 1020 840 Closing stock-(180)--(180)(60) Cost of sales900 720 1080 900 840 960 Fixed costs three hundred 300 300 300 300 300 Total costs1200 1020 1380 1200 1140 1260 Sales1500 1200 1800 1500 1400 1600 Gross profit300 180 420 300 260 340 Less non-manufacturing costscentury ampere-second blow 100 100 100 Net profit200 80 320 200 160 240 Exhibit 2 Absorption costing statements: P1P2P3P4P5P6 ($)($)($)($)($)($) Opening stock--240 --240 Production cost1200 1200 1200 1200 1360 1120 Closing stock-(240)--(240)(80) Cost of sales1200 960 1440 1200 1120 1280 Adjustment (over/ on a scorn floor recovery) of overheads(40)20 Total costs1200 960 1440 1200 1080 1300 Sales1500 1200 1800 1500 1400 1600 Gross profit300 240 360 300 320 300 Less non-manufacturing costs100 100 100 100 100 100 Net profit200 140 260 200 220... While more or less may view this opus as being pretty to technical, it is informative and can by all odds be used as a resource for seek along with other material. dandy Job. If you want to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper