Professional Documents
Culture Documents
Chapter 15:
Segmented Reporting
and Performance
Evaluation
Afif Khairi
Billinardo Eri Saputra
Yudha Nandatama
Variable overhead
Direct labor
Variable overhead
Fixed overhead
Inventory Valuation
Units in beginning inventory
Units produced
Units sold ($300 each)
Normal volume
Variable cost per unit :
Direct Materials
Direct labors
Variable Overhead
Variable Selling & Administrative
Fixed costs:
Fixed overhead
Fixed selling and administrative
--10,000
8,000
10,000
$50
$100
$50
$10
$250,000
100,000
Unit Cost
Variable
costing
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total
$ 50
100
50
$200
Absorption
costing
$ 50
100
50
25
$225
Fairchild Company
Variable-Costing Income Statement
Sales
$2,400,000
Less variable expenses:
Variable cost of goods sold $1,600,000
Variable selling and admin.
80,000 1,680,000
Contribution margin
$ 720,000
Less fixed expenses:
Fixed overhead
$ 250,000
Fixed selling and admin.
150,000
350,000
Net income
$ 370,000
Fairchild Company
Absorption-Costing Income Statement
Sales
Less: Cost of goods sold
Gross margin
Less: Selling and administrative exp.
Net income
$2,400,000
1,800,000
$ 600,000
180,000
$ 420,000
Then
Absorption NI > Variable NI
Absorption NI < Variable NI
Absorption NI = Variable NI
Example
To illustrate these relationship consider the example
based on the operating Data for Belnip, Inc., for years
2002, 2003, and 2004 follows:
Variable cost per unit:
Direct materials
Direct labor
Variable overhead (estimated and actual)
Variable selling and administrative
$4.00
1.50
0.50
0.25
150,000
150,000
-
2005
2006
150,000
100,000
50,000
50,000
150,000
200,000
-
Variable-Costing Income
Statements
2004
Sales
2005
2006
$1,500.0
$1,000
$2,000
(900.0)
(600)
(1,200)
(37.5)
(25)
(50)
$562.5
$375
$750
(150)
(150)
(150)
(50)
(50)
(50)
$362.5
$175
$550
Contribution margin
Less fixed expenses:
Fixed overhead
Fixed selling and admin
Net Income
Variable-Costing Income
Statements (cont)
Beginning Inventory
Variable cost of goods manufactured
Goods available for sale
Less: Ending Inventory
Variable costs of goods sold
$0,25 per unit x units sold
$900
$900
$900
$900
$900
$300
$600
$300
$900
$1200
$1200
Absorption-Costing Income
Statements
2004
Sales
Less: Cost of goods sold
Gross margin
Less: Selling and admin. exp.
Net income
Beginning Inventory
Cost of goods manufactured
Goods available for sale
Less: Ending Inventory
Variable costs of goods sold
2005
2006
$350
$1050
$1400
$1400
$500,000 $550,000 = $1 x
(150,000 200,000)