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Chapter 9 formulas

Terms in this set (18)

Absorption costing operating income- variable costing operating income eqals
fixed manufacturing costs in ending inventory under absorption costing- fixed manufacturing costs in beginning inventory under absorption costing
beginning inventory + cost of goods manufactured =
cost of goods sold + ending inventory
Absorption costing operating income- variable costing operating income equals=
fixed manufacturing costs inventoried in units produced under absorption costing- fixed manufacturing costs in COGS under absorption costing
Contribution margin per unit =
selling price- variable manufacturing cost per unit- variable marketing cost per unit
Change in variable costing operating income
contribution margin per unit x change in quantity of units sold
How do these changes in unit inventory levels effect operating income?

Production = sales
Variable costing: Equal

absorption costing: Equal
How do these changes in unit inventory levels effect operating income?

Production > sales
Variable costing: Lower

Absorption costing: Higher
How do these changes in unit inventory levels effect operating income?

Production< sales
Variable costing: Higher

Absorption costing: Lower
Companies that use both methods for internal reporting, variable costing for short-run decisions and performance evaluation, and absorption costing for long-run decisions- .......
benefit from the relative advantages of each
production volume variance=
(budgeted fixed manufacturing overhead)
-
(fixed manufacturing overhead allocated using budgeted cost per unit allowed for actual output produced)
Gross Margin
Sales Revenue - COGS
Inventoriable cost per unit
variable production cost + fixed manufacturing overhead rate
Fixed manufacturing overhead rate
Budgeted fixed manufacturing costs/ budgeted capacity level
Production Volume Variance=
budgeted fixed manufacturing overhead- fixed manufacturing overhead allocated using budgeted cost per output unit allowed for actual output production
Production volume variance
total fixed manufacturing overhead- (actual production x fixed manufacturing overhead rate)
total fixed manufacturing overhead
is just your fixed manufacturing cost.

IDK why the **** it says overhead instead of costs, they just like to engage in nonsense with their word choice sometimes
Allocated fixed manuf. costs
production in units budgeted fixed manuf. cost allocated per unit
Production volume variance
budgeted fixed manuf. costs - allocated fixed manuf. costs
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