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Absorption Costing vs. Variable Costing

Absorption Costing Costingg1 AbsorptionVariableSSCGSVCGPCMS&AFCNIABSN IVC2 Overview of Absorptionand Variable CostinggVariableCostingAbsorptionCosting DMDLP roductPdtDMDLDLVMOHC ostsProductCostsDLVMOHVS&APeriodCtPeriod VS&AFMOHFS&ACostsPeriodCostsFS&A3 Unit Cost ComputationsHarvey Company produces a single productwith the following information available:g4 Unit Cost ComputationsUnitproduct cost is determined as follows:pUnderabsorption Costing , S&A expenses arepg,palways treated asperiod expenses anddeducted from revenue as Comparison ofAbsorption and Variable CostingAbsorption and Variable CostingLet s assume the following additional information for Harvey Companyinformation for Harvey Company.

Absorption Costing Absorption Costing Less cost of goods sold: Goods available for sale 480 000480,000 Less ending inventory - 480,000 Gross margin 420,000 Less selling & admin. exp. Fixed 100,000 190,000 Net operating income 230,000$ These are the 25,000 units produced in the current period. 13 Variable Costing Variable manufacturing costs only.

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