Escolar Documentos
Profissional Documentos
Cultura Documentos
Duration: 60 mins
Slides: 12
Variable Costs
Manufacturing costs per unit produced Rs. 1,00,000 Rs. 1,00,000
Operating costs per unit sold Rs. 30,000 Rs. 30,000
Fixed Costs
Manufacturing costs Rs. 2,00,00,000 Rs. 2,00,00,000
Operating costs Rs. 60,00,000 Rs. 60,00,000
Solution Production
Goods available for
500
500
400
550
sale
Units sold 350 520
Marginal Costing Ending inventory 150 30
April May
Revenue 2,40,000*350 = 8,40,00,000 2,40,000*520 = 12,48,00,000
Costs:
Beginning Inventory 0 1,00,000*150 = 1,50,00,000
Variable manufacturing costs 1,00,000*500 = 5,00,00,000 1,00,000*400 = 4,00,00,000
April May
Revenue 2,40,000*350 = 8,40,00,000 2,40,000*520 = 12,48,00,000
Costs:
Beginning Inventory 0 2,10,00,000
Variable manufacturing costs 1,00,000*500 = 5,00,00,000 1,00,000*400 = 4,00,00,000
Fixed Manufacturing costs 2,00,00,000 2,00,00,000
Cost of goods available for sale 7,00,00,000 8,10,00,000
Deduct Ending Inventory (1,40,000*150 = 2,10,00,000) (1,50,000*30= 45,00,000)
COGS 4,90,00,000 7,65,00,000
Variable operating costs 30,000*350 = 1,05,00,000 30,000*520 = 1,56,00,000
Fixed operating costs 60,00,000 60,00,000
Operating Income 1,85,00,000 2,67,00,000
• April:
1,85,00,000 – 1,25,00,000 = (40,000*150)-0
60,00,000 = 60,00,000
• May:
2,67,00,000 – 3,12,00,000 = (50,000*30) – (40,000*150)
-45,00,000 = -45,00,000
• That will leave a smaller amount of fixed costs to be expensed during the
period
• Deferring maintenance
• REMEDIES
o Careful budgeting and inventory planning
o Incorporate an internal carrying charge for inventory
o Change (lengthen) the period used to evaluate performance
o Include nonfinancial as well as financial variables in the measures to evaluate
performance