Escolar Documentos
Profissional Documentos
Cultura Documentos
Accounting
Example
Absorption Costing
Marginal Costing
Produced units =
Units sold
Same Profit
Same Profit
More Profit
Less Profit
Less Profit
More Profit
Reconciliation
B- 80 units sold & 20 units in stock
Absorption Profit
4,800
(400)
4,400
Reconciliation
No. of units sold 110
Absorption Profit
Adds Closing Stock @ Fixed FOH Rate
10
x
20
Marginal Costing Profit
6,600
200
6,800
Example
Selling price
Units produced
30,000
Units sold
20,000
Opening stock
Variable cost
Direct material
Direct labor
F.O.H
Fixed cost
F.O.H
Selling & administrative expenses
Rs 1,20,000
15,000
Absorption Costing
Fixed FOH Rate
Marginal Costing
Variable FOH Rate
= 1,20,000 / 30,000 =
Direct Labor
FOH
1
9
13
Direct Material
Direct Labor
FOH
5
3
1
9
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1,40,000
85,000
4, 00,000
Less Variable cost of goods sold
Opening stock
0
Add Variable production cost (9 x 30,000)
2,70,000
Less Closing stock
(9 x 10,000)
90,000
1,80,000
1,20,000
15,000
1,35,000
Net Profit
45,000
Reconciliation
Profit as absorption costing
Less Closing stock (10,000 x 4)
Marginal costing
85,000
40,000
45,000
Reconciliation
Profit as absorption costing
Add opening stock @ fixed FOH cost per unit
Less Closing stock @ fixed FOH cost per unit
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Marginal Costing
100 units
Direct Material
Rs. 80 per unit
8,000
8,000
Direct Labor
Rs. 50 per unit
5,000
5,000
Factory Overhead
Variable FOH
Fixed FOH
Product Cost
Fixed Cost
(Period Expenses)
3,000
2,000
3,000
----5,000
18,000
16,000
(2,000)
18,000