chapter_7教程.ppt
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Chapter 7 Learning Objective 1 Overview of Absorption and Variable Costing Quick Check ? 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. . . Unit Cost Computations Harvey Company produces a single product with the following information available: Unit Cost Computations Unit product cost is determined as follows: Learning Objective 2 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 were no units in beginning inventory. Now, let’s compute net operating income using both absorption and variable costing. Absorption Costing Variable Costing Learning Objective 3 Comparing the Two Methods Comparing the Two Methods Extended Comparisons of Income Data Harvey Company Year Two Unit Cost Computations Absorption Costing Variable Costing Comparing the Two Methods Comparing the Two Methods Summary of Key Insights Effect of Changes in Production on Net Operating Income Effect of Changes in Production Harvey Company Year One Unit Cost Computations for Year One Unit product cost is determined as follows: Absorption Costing: Year One Variable Costing: Year One Effect of Changes in Production Harvey Company Year Two Unit Cost Computations for Year Two Unit product cost is determined as follows: Absorption Costing: Year Two Variable Costing: Year Two Comparing the Two Methods Learning Objective 4 Impact on the Manager CVP Analysis, Decision Making and Absorption costing Absorption costing does not support CVP analysis because it essentially treats fixed manufacturing overhead as a variable cost by assigning a per unit amount of the fixed overhead to each unit of production. External Reporting Advantages of Variable Costing and the Contribution Approach Advantages of
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