Transcription of Absorption Costing vs. Variable Costing
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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.
Advantages of Variable Costing and the Contribution Approach Consistent with Management finds it f l CVP analysis. Net operating income it more useful. il tis closer to net cash flow. Advantages Consistent with standard costs and flexible budgeting. Easier to estimate profitability Profit is not affected by Impact of fixed costs on profits
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