What is the difference between the unit cost of a product under absorption costing and variable...
What is the difference between the unit cost of a product under absorption costing and variable costing? Which method do you find most valuable to the the operations managers and why?
Homework Answers
Unit product cost under absorption costing :-
Unit product cost under absorption costing includes Direct Materials, Direct labor, variable manufacturing overhead and Fixed manufacturing overhead. It is to be noted that absorption costing treats fixed manufacturing overhead as product cost
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Unit product cost under variable costing :-
Unit product here includes Direct Materials,, direct labor and variable manufacturing overhead. Variable costing treats fixed manufacturing overhead as period cost.
.
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Absorption costing is preferred because it complies with the Generally Accepted accounting principles
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What is the difference between the unit cost of a product under
absorption costing and variable...
Requirements - X 1. Compute the product cost per unit produced under absorption costing and under variable costin...
Requirements - X 1. Compute the product cost per unit produced under absorption costing and under variable costing. 2. Prepare income statements for January 2020 using: a. absorption costing. b. variable costing. 3. Is operating income higher under absorption costing or variable costing in January? What causes the difference? Print Done i Data Table January 2020 Units produced and sold: Sales 945 1,000 units units Production 450 25 Variable manufacturing cost per unit Sales commission cost per unit Total fixed...
Variable Costing and Absorption Costing - under the traditional costing approach, absorption costing, or full costing,...
Variable Costing and Absorption Costing - under the traditional costing approach, absorption costing, or full costing, products absorb all costs incurred to product them which can result in misleading product cost information for decision-making. Under variable costing only costs that change in total with changes in production level are included in product costs. The difference between the two costing methods is the exclusion of fixed overhead from product cost for variable costing. Post your response and ideas of the following...
1) what is the amount of the difference between the variable costing and absorption costing net...
1) what is the amount of the difference between the variable
costing and absorption costing net operating incomes (losses)?
2) Whats the company's break-even point in unit sales?
is the above or below the actual unit sales?
Diego Company manufactures one product that is sold for $76 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 58,000 units and sold 54,000 units. Variable costs...
1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is...
1. Complete the following:
a. Compute the unit product cost under absorption
costing.
b. What is the company’s absorption costing net operating
income (loss) for the quarter?
c. Reconcile the variable and absorption costing net operating
income (loss) figures.
3. During the second quarter of operations, the company again
produced 31,500 units but sold 34,500 units. (Assume no change in
total fixed costs.)
a. What is the company’s variable costing net operating income
(loss) for the second quarter?
b. What...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of $59, of which $41 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $93 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016 2015 Units Manufactured Units Sold 120,000 90,000 120,000 130,000...
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $74 per unit, and fixed...
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $74 per unit, and fixed manufacturing costs are $58,500. Sales are estimated to be 4,300 units. f an amount is zero, enter "O". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 4,300 units and a plan to produce 6,500 units? b. How much would variable costing income from operations differ...
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $104 per unit, and fixed...
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $104 per unit, and fixed manufacturing costs are $54,400. Sales are estimated to be 5,700 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 5,700 units and a plan to produce 6,800 units? $ b. How much would variable costing income from operations...
EKP's unit production cost under variable costing is $5, and $7 under absorption costing. Net income...
EKP's unit production cost under variable costing is $5, and $7 under absorption costing. Net income under variable costing was $9000 and $11000 under absorption costing last year. EKP sold 25500 units. How many units did it produce? a. 26500 b. 24500 C. 27300 d. 23500
3. Reconcile the difference between variable costing and absorption costing net operating income in year 1...
3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss) $ 0 $ 0 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: - 14 Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of $57, of which $39 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $89 per unit, and the cost structure did not change. Scott uses the first-in first-out inventory method and has the following production and sales for 2015 and 2016 Units Manufactured Units Sold 90,000 20,000 130,000 2015 120,000...
Requirements - X 1. Compute the product cost per unit produced under absorption costing and under variable costing. 2. Prepare income statements for January 2020 using: a. absorption costing. b. variable costing. 3. Is operating income higher under absorption costing or variable costing in January? What causes the difference? Print Done i Data Table January 2020 Units produced and sold: Sales 945 1,000 units units Production 450 25 Variable manufacturing cost per unit Sales commission cost per unit Total fixed...
Variable Costing and Absorption Costing - under the traditional costing approach, absorption costing, or full costing, products absorb all costs incurred to product them which can result in misleading product cost information for decision-making. Under variable costing only costs that change in total with changes in production level are included in product costs. The difference between the two costing methods is the exclusion of fixed overhead from product cost for variable costing. Post your response and ideas of the following...
1) what is the amount of the difference between the variable
costing and absorption costing net operating incomes (losses)?
2) Whats the company's break-even point in unit sales?
is the above or below the actual unit sales?
Diego Company manufactures one product that is sold for $76 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 58,000 units and sold 54,000 units. Variable costs...
1. Complete the following:
a. Compute the unit product cost under absorption
costing.
b. What is the company’s absorption costing net operating
income (loss) for the quarter?
c. Reconcile the variable and absorption costing net operating
income (loss) figures.
3. During the second quarter of operations, the company again
produced 31,500 units but sold 34,500 units. (Assume no change in
total fixed costs.)
a. What is the company’s variable costing net operating income
(loss) for the second quarter?
b. What...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of $59, of which $41 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $93 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016 2015 Units Manufactured Units Sold 120,000 90,000 120,000 130,000...
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $74 per unit, and fixed manufacturing costs are $58,500. Sales are estimated to be 4,300 units. f an amount is zero, enter "O". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 4,300 units and a plan to produce 6,500 units? b. How much would variable costing income from operations differ...
EKP's unit production cost under variable costing is $5, and $7 under absorption costing. Net income under variable costing was $9000 and $11000 under absorption costing last year. EKP sold 25500 units. How many units did it produce? a. 26500 b. 24500 C. 27300 d. 23500
3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss) $ 0 $ 0 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: - 14 Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs...
Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of $57, of which $39 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $89 per unit, and the cost structure did not change. Scott uses the first-in first-out inventory method and has the following production and sales for 2015 and 2016 Units Manufactured Units Sold 90,000 20,000 130,000 2015 120,000...
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