Penentuan Kos Variabel PERTEMUAN 7 Dr Rilla Gantino, SE., Ak., MM Prodi Akuntansi- FEB
Penentuan Kos Variabel
PERTEMUAN 7
Dr Rilla Gantino, SE., Ak., MM
Prodi Akuntansi- FEB
KEMAMPUAN AKHIR YANG DIHARAPKAN
Mahasiswa dapat menjelaskan : pengertian, manfaat dan pandangan harga pokok variabel, perbedaan antara harga pokok variabel dan Full Costing., manfaat informasi yang dapat diperoleh dari penentuan harga pokok variabel, dan penentuan harga pokok variabel di dalam perencanaan dan pembuatan keputusan jangka pendek
Managerial Accounting by James Jiambalvo
Full (Absorption) Costing
1.includes: a.
Direct material b. Direct labor c. Manufacturing overhead (both variable and fixed)
2. Decision making and “what-if” decisions are difficult because of the
commingling of fixed and variable
overhead.3. Required for GAAP.
Variable Costing 1
includes: a.
Direct material b. Direct labor c. Variable Manufacturing overhead 2. Variable Costing lends itself well to decision making and “what-if” analyses.
Differences Between Full
(Absorption) and Variable Costing
1.Fixed manufacturing overhead (included in Full Costing).
2. Fixed manufacturing costs, like depreciation, are a period expense on the income statement under variable costing.
3. Fixed manufacturing costs, like depreciation, are inventoried until sold under full costing.
Variable Costing Income Statement
2. All costs, manufacturing, selling and administrative, are classified as either .
Variable Costing Income Statement Example
Sales $100,000
Less Variable: Variable COGS $20,000 Variable Selling 10,000 Variable Admin. 5,000 35,000
Contribution Margin 65,000 Less Fixed:
Fixed Mfg. 10,000 Fixed Selling 8,000 Fixed Admin 7,000 25,000
Net Income 40,000
Full (Absorption) Costing Income Statement Example
Sales $100,000
Less COGS 30,000
Gross Margin 70,000
Less Selling and Admin: Selling 18,000 Admin 12,000 30,000
Net Income 40,000
Effects of Production on Income for Full
Versus Variable Costing: Clausen Tube Facts: 5,000 units produced and sold Selling Price: $2,000 per unit Variable Manufacturing:
Direct Materials: $600 per unit Direct Labor: $225 per unit Variable MFG: $75 per unit
Fixed Manufacturing: $1,200,000 per year Selling Expense: $40 per unit variable plus $100,000 fixed.
Administrative: $500,000 per year (fixed)
Clausen Tube Income Statement: Full Costing
Sales $10,000,000
Less COGS 5,700,000
Gross Margin 4,300,000 Less Selling and Admin:
Selling $300,000 Admin 500,000 800,000
Net Income $3,500,000
Clausen Tube Income Statement: Variable Costing
Sales $10,000,000
Less Variable: Variable COGS $4,500,000 Variable Selling and Admin 200,000 Contribution Margin 5,300,000 Less Fixed:
Fixed Mfg. 1,200,000 Fixed Selling 100,000 Fixed Admin 500,000 1,800,000
Net Income $3,500,000
Variable Costing Income Statement: Considerations
1. When sales volume and production volume are exactly equal, net income is the same under either full or variable costing.
2. is easily calculated under variable costing: 2,000 – 940 = 1,060.
2,000 = 53%
Clausen Tube: Production is Greater
Than Sales Facts: 6,000 units produced and 4,800 units sold Selling Price: $2,000 per unit Variable Manufacturing:
Direct Materials: $600 per unit Direct Labor: $225 per unit Variable MFG: $75 per unit
Fixed Manufacturing: $1,200,000 per year Selling Expense: $40 per unit variable plus $100,000 fixed.
Administrative: $500,000 per year (fixed)
Clausen Tube Income Statement: Full Costing-- Production > Sales
Sales $ 9,600,000
Less COGS 5,280,000
Gross Margin 4,320,000 Less Selling and Admin:
Selling $292,200 Admin 500,000 792,200
Net Income $3,528,000
Clausen Tube Income Statement:
Variable Costing-- Production > Sales
Sales $ 9,600,000
Less Variable: Variable COGS $4,320,000 Variable Selling and Admin 192,000 Contribution Margin 5,088,000 Less Fixed:
Fixed Mfg. 1,200,000 Fixed Selling 100,000 Fixed Admin 500,000 1,800,000
Net Income $3,288,000
Variable Costing Income Statement: Considerations-- Production > Sales
1. Net income is higher under full costing than variable costing.
2. $3,528,000 vs. $3,288,000 = $240,000
3. The $240,000 difference is due to the 1,200 (6,000 – 4,800) additional units produced and unsold.
4. Fixed manufacturing $1,200,000 / 6,000 units x 1,200 units remaining = $240,000
Summary of Effects of Production on Net Income
- If units produced = units sold, then no difference between full costing and variable costing net income.
- If units produced > units sold, then full costing net income is greater than variable costing net income.
- If units produced < units sold, then full costing net income is less than variable costing net income.
Impact of JIT on the Income
Effects of Full Versus Variable Costing
1. inventory systems lead to low inventories.
2. Results in little difference between production and sales.
3. Variable versus absorption net income differences negligible.
Benefits of Variable Costing for Internal Reporting
1. Variable costing facilitates C-V-P analysis because it uses a “contribution” approach.
2. Variable costing mitigates the effects of earnings management because fixed manufacturing costs are not inventoried. Thus, merely increasing production volume relative to sales will not boost net income.
Quick Review Question #1
1.Which of the following lends itself well to C-V-P Analysis?
a.
Full Costing b. Absorption Costing c. Variable Costing d. Average Costing
Quick Review Answer #1 1.
Which of the following lends itself well to C-V-P Analysis?
a.
Full Costing b. Absorption Costing c.
Variable Costing d.
Average Costing
Quick Review Question #2 2
Units produced = 2,000, units sold = 1,800, contribution margin ratio is 37%, fixed S & A expenses are $90,000. Fixed mfg. Expenses are $80,200 By how much is net income greater under full costing than variable costing? a.
$8,020 b. $80,200 c. $9,000
Quick Review Answer #2 2.
Units produced = 2,000, units sold = 1,800, contribution margin ratio is 37%, fixed S & A expenses are $90,000. Fixed mfg. Expenses are $80,200 By how much is net income greater under full costing than variable costing? a. b. $8,020 c.
$80,200 d. $9,000 $17,020
Quick Review Question #3 3
Which of the following complies with GAAP for external reporting purposes? a.
Absolute costing b. Variable costing c. Fixed costing d. Absorption costing
Quick Review Answer #3 3
Which of the following complies with GAAP for external reporting purposes? a.
Absolute costing b. Variable costing c. Fixed costing d.
Absorption costing
Quick Review Question #4
4.Which of the following lends itself well to internal decision making?
a.
Full costing b. Variable costing c. Absorption costing d. None of these
Quick Review Answer #4 4.
Which of the following lends itself well to internal decision making?
a.
Full costing b.
Variable costing c
Absorption costing d. None of these
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Learning Objective 1 Explain how variable
Explain how variable costing differs from
costing differs from absorption costing and
absorption costing and compute unit product
compute unit product
costs under each method.
costs under each method. Overview of Absorption and Variable Costing Absorption
Variable Costing Costing
Direct Materials Product
Direct Labor Product
Costs Costs Variable Manufacturing Overhead Fixed Manufacturing Overhead
Period
Variable Selling and Administrative Expenses
Period Costs Costs
Fixed Selling and Administrative Expenses
Quick Check
Which method will produce the highest values for work in process and finished goods inventories?
Which method will produce the highest values for
work in process and finished goods inventories? a. Absorption costing.b. Variable costing.
c. They produce the same values for these inventories.
d. It depends. . .
a. Absorption costing.
b. Variable costing.
c. They produce the same values for these inventories.
d. It depends. . .
Which method will produce the highest values for
work in process and finished goods inventories? a. Absorption costing.b. Variable costing.
c. They produce the same values for these inventories.
d. It depends. . .
Which method will produce the highest values for
work in process and finished goods inventories?
a. Absorption costing.b. Variable costing.
c. They produce the same values for these inventories.
d. It depends. . .
Quick Check
Harvey Company produces a single product with the following information available: Unit Cost Computations
Unit product cost is determined as follows:
Under absorption costing, all production costs, variable
and fixed, are included when determining unit product
cost. Under variable costing, only the variable
Unit Cost Computations
Learning Objective 2
Prepare income
Prepare income
statements using both
statements using both
variable and absorption
variable and absorption
costing. costing. Income Comparison of Absorption and Variable Costing
Let’s assume the following additional information for Harvey Company.
20,000 units were sold during the year at a price of $30 each.
There is no beginning inventory.
Now, let’s compute net operating income using both absorption and variable costing. Absorption Costing
Fixed manufacturing overhead deferred in
Variable Costing Sales (20,000 × $30) 600,000 $ Less variable expenses: Beginning inventory - $ Add COGM (25,000 × $10) 250,000 Goods available for sale 250,000 Less ending inventory (5,000 × $10) 50,000 Variable cost of goods sold 200,000 Variable selling & administrative
expenses (20,000 × $3) 60,000 260,000
Contribution margin340,000 Less fixed expenses: Manufacturing overhead 150,000 $
Selling & administrative expenses 100,000 250,000
Variable Costing Sales (20,000 × $30) 600,000 $ Less variable expenses: Beginning inventory - $ Add COGM (25,000 × $10 ) 250,000 Goods available for sale 250,000 Less ending inventory (5,000 × $10 ) 50,000 Variable cost of goods sold 200,000 Variable selling & administrative
expenses (20,000 × $3) 60,000 260,000
Contribution margin340,000 Less fixed expenses: Manufacturing overhead 150,000 $
Selling & administrative expenses 100,000 250,000
Variable
manufacturing
costs only.
All fixed manufacturing overhead is expensed.
Variable Costing
Learning Objective 3
Reconcile variable costing
Reconcile variable costing
and absorption costing net
and absorption costing net
operating incomes and
operating incomes and
explain why the two
explain why the two
amounts differ.
amounts differ. Comparing the Two Methods
Variable costing net operating income 90,000 $ Add: Fixed mfg. overhead costs deferred in inventory (5,000 units × $6 per unit) 30,000 Absorption costing net operating income 120,000 $ Variable costing net operating income 90,000 $ Add: Fixed mfg. overhead costs deferred in inventory (5,000 units × $6 per unit) 30,000 Absorption costing net operating income 120,000 $ Fixed mfg. overhead $150,000 = = $6 per unit We can reconcile the difference between absorption and variable income as follows: Comparing the Two Methods
Extended Comparisons of Income Data
Harvey Company – Year TwoUnit Cost Computations
Since the variable costs per unit, total fixed costs,
Since the variable costs per unit, total fixed costs,
and the number of units produced remained
and the number of units produced remained
unchanged, the unit cost computations also
unchanged, the unit cost computations also
remain unchanged.
remain unchanged.
Absorption Costing Sales (30,000 × $30) 900,000 $ Less cost of goods sold: Beg. inventory (5,000 × $16) 80,000 $ Add COGM (25,000 × $16) 400,000 Goods available for sale 480,000 Less ending inventory - 480,000 Gross margin 420,000 Less selling & admin. exp. Variable (30,000 × $3) 90,000 $ Fixed
100,000 190,000 Net operating income 230,000 $ Absorption Costing Sales (30,000 × $30)
900,000 $ Less cost of goods sold: Beg. inventory (5,000 × $16 ) 80,000 $ Add COGM (25,000 × $16 ) 400,000 Goods available for sale 480,000 Less ending inventory - 480,000 Gross margin 420,000 Less selling & admin. exp. Variable (30,000 × $3) 90,000 $ Fixed
100,000 190,000 Net operating income 230,000 $
Absorption Costing
Fixed manufacturing overhead released from
Unit product cost. Variable Costing All fixed manufacturing overhead is expensed. Variable manufacturing costs only.
Comparing the Two Methods We can reconcile the difference between absorption and variable income as follows: Variable costing net operating income $ 260,000 Deduct: Fixed manufacturing overhead costs released from inventory (5,000 units × $6 per unit) 30,000 Absorption costing net operating income $ 230,000 Fixed mfg. overhead $150,000 = = $6 per unit
Comparing the Two Methods
Summary of Key Insights
Learning Objective 4
Understand the
Understand the
advantages and
advantages and
disadvantages of both
disadvantages of both
variable and absorption
variable and absorption
costing.
costing.Impact on the Manager
Opponents of absorption costing argue that shifting fixed manufacturing overhead costs between periods can lead to faulty decisions.
Opponents of absorption costing argue that shifting fixed manufacturing overhead costs between periods can lead to faulty decisions.
These opponents argue that variable costing income statements are easier to understand because net operating income is only affected by changes in unit sales. This produces net operating income figures that are consistent with managers’ expectations. These opponents argue that variable costing income statements are easier to understand because net operating income is only affected by changes in unit sales. This produces net operating income figures that are consistent with managers’ expectations. CVP Analysis, Decision Making and Absorption costing
Absorption costing does not dovetail with CVP analysis,
nor does it support decision making. It treats fixed manufacturing overhead as a variable cost. It assigns perunit fixed manufacturing overhead costs to production.
Treating fixed manufacturing overhead as a variable cost can:
Treating fixed manufacturing overhead as a variable cost can:
- Lead to faulty pricing decisions and faulty keep-or-drop decisions.
- Lead to faulty pricing decisions and faulty keep-or-drop decisions.
Assigning per unit fixed manufacturing overhead costs to production can:
- Potentially produce positive net operating income even when the number of units sold is less than Assigning per unit fixed manufacturing overhead costs to production can:
- Potentially produce positive net operating income even when the number of units sold is less than the breakeven point.
To conform to
GAAP requirements,
Under the Tax Reform Act of 1986, absorption costing must be used when filling out income tax returns. Since top executives are typically evaluated based on earnings reported to shareholders in external reports, they may feel that decisions should be based on
Under the Tax Reform Act of 1986, absorption costing must be used when filling out income tax returns.
United States.
external financial reports in the United States.
external financial reports in the
absorption costing must be used for
absorption costing must be used for
GAAP requirements,
GAAP requirements,
To conform to
To conform to
United States.
external financial reports in the United States.
external financial reports in the
absorption costing must be used for
absorption costing must be used for
GAAP requirements,
Since top executives are typically evaluated based on earnings reported to shareholders in external reports, they may feel that decisions should be based on Advantages of Variable Costing and the Contribution Approach Consistent with CVP analysis.
Management finds
Net operating income it more useful. is closer to net cash flow.
Consistent with standard costs and flexible budgeting.
Advantages
Easier to estimate profitability of products and segments.
Impact of fixed costs on profits Profit is not affected by emphasized.
Variable versus Absorption Costing
Fixed manufacturing costs must be assigned Fixed manufacturing to products to properly costs are capacity costs match revenues and and will be incurred costs. even if nothing is produced.
Variable Variable Costing and the Theory of Constraints (TOC) Companies involved in TOC use a form of variable costing. However, one difference of the TOC approach is that it treats direct labor as a fixed cost for three reasons:
Many companies have a commitment to guarantee workers a minimum number of paid hours.
Direct labor is usually not the constraint.
TOC emphasizes the role direct laborers play in driving continuous improvement. Since layoffs often devastate morale, managers involved in TOC are extremely reluctant to lay off employees. Impact of Lean Production
When companies use Lean Production . . .
Production
tends to equal
sales . . .
So, the difference between variable and
absorption income tends to disappear.