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1Beginning Inventory2.000
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Ending Inventory4.000
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Units Sold18.000
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Actual production20.000
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Production Capacity21000
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Selling price$16
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Variable Manufacturing Cost$80.000
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Fixed Manufacturing Cost$18.000
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Total Fixed Selling and Admin Expense$2.000
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Total l Variable Selling and Admin cost$1
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Absorption Costing
Inventoriable Cost
Variable costing
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Variable cost$4$4,86Inventoriable cost$4
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production capacityActual capacity
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Fixed manufacuring cost$0,86$0,9
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Revenue$288.000Revenues$288.000
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Variable COGS:
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Beginning inventory$9.714,29Beginning inventory$8.000
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Variable manufacturing cost$80.000Variable manuf cost$80.000
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Allocated fixed manuf cost$18.000
Cost of goods available for sale
$88.000
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Cost of goods available for sale$107.714,29
Deduct ending inventory
-$16.000
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(-) ending inventory$19.428,57Variable COGS$72.000
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Costs of goods sold$88.285,71
Variable selling and and administrative costs
$18.000
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Contribution margin$198.000
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Gross margin$199.714
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Variable selling and administrative costs18000Fixed manuf cost$18.000
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Fixed selling and administrative costs$2.000
Fixed selling and administrative costs
$2.000
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Operating income$179.714Operating income$178.000
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2ReconciliationCara 1Cara 2
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Variable Costing - Net income$178.000
(Ending Inventory - Beg. Inventory) x Fixed Manufacturing Cost
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Less: Fixed Manufacturing Overhead - Additional Inventory Sold$1.714,29$1.714,29
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Absorption Costing - Net Income$179.714
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Preferable method
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Absorption method, since unit produced more than unit sold, resulting in higher amount of ending inventory. Higher amount
ending inventory caused fixed manufacturing cost that contained on ending inventory will not be expensed, resulting in higher operating income
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