TAILIEUCHUNG - Lecture Financial and managerial accounting (4/e): Chapter 19 - Wild, Shaw, Chiappetta

Chapter 19 - Variable costing and performance reporting. After you have read this chapter you should be able to: Describe how absorption costing can result in over-production, explain the role of variable costing in pricing special orders, compute and interpret break-even volume in units, compute unit cost under both absorption and variable costing,. | Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 19 Variable Costing and Performance Reporting Conceptual Learning Objectives C1: Describe how absorption costing can result in over-production. C2: Explain the role of variable costing in pricing special orders. 19- A1: Compute and interpret breakeven volume in units. Analytical Learning Objectives 19- P1: Compute unit cost under both absorption and variable costing. P2: Prepare and analyze an income statement using absorption costing and using variable costing. P3: Prepare a contribution margin report. P4: Convert income under variable costing to the absorption cost basis. Procedural Learning Objectives 19- Absorption costing (also called full costing), assumes that products absorb all costs incurred to produce them. While widely used for financial reporting (GAAP), this costing method can result in misleading product cost information for business decisions. Absorption Costing & Variable Costing C1 19- Absorption Costing & Variable Costing Under variable costing, only costs that change in total with changes in production level are included in product costs. C2 19- Distinguishing Between Absorption Costing and Variable Costing: Absorption Costing Absorption Costing Direct Materials Direct Labor Variable Overhead Fixed Overhead Product Cost P1 19- Distinguishing Between Absorption Costing and Variable Costing: Variable Costing Variable Costing Direct Materials Direct Labor Variable Overhead Fixed Overhead Product Cost Period Cost P1 19- Difference Between Absorption Costing and Variable Costing: Computing Unit Cost P1 19- Difference Between Absorption Costing and Variable Costing: Computing Unit Cost P1 19- Analysis of Income Reporting for Both Absorption and Variable Costing P1 19- Analysis of Income Reporting for Both Absorption and Variable Costing: Units Produced Equal Units Sold A1 19- Analysis of Income Reporting for Both Absorption and Variable Costing: Units Produced Exceed Units Sold P2 19- Analysis of Income Reporting for Both Absorption and Variable Costing: Units Produced Are Less Than Units Sold P2 19- Income Reporting Summarized P2 19- Planning Production C1 Producing too much inventory Excess inventory Higher storage and financing costs Greater risk of obsolescence Producing too little inventory Lost sales Customer dissatisfaction 19- Setting Prices Over the Long Run: Price must be high enough to cover all costs, including variable costs and fixed costs, and still provide an acceptable return to owners C2 19- Setting Prices Over the Short Run: Fixed production costs such as the cost to maintain plant capacity do not change with changes in production levels. With excess capacity, increases in production level would increase variable production costs, but not fixed costs. While managers try to maintain the long-run price on existing orders, which covers all production costs, managers should accept special orders provided the special order price exceeds variable cost. C2 19- Limitations of Reports Using Variable Costing P3 Absorption costing is almost exclusively used for external reporting (GAAP). For income tax purposes, absorption costing is the only acceptable basis for filings with the Internal Revenue Service (IRS) under the Tax Reform Act of 1986. Absorption costing is the only acceptable basis for both external reporting and tax reporting. 19- End of Chapter 19 19-

• Tài chính doanh nghiệp
• Managerial accounting
• Lecture Financial and managerial accounting
• Financial statements
• Managerial decisions
• Variable costing
• Performance reporting
• Managerial accounting for managers
• Lecture Managerial accounting
• Profitability analysis
• Decision making
• Operations management majors
• Nonmanufacturing costs
• Classifications of costs
• Kế toán quản trị
• Managerial accounting information
• General cost classifi cations
• Product costs
• Process costing
• Standard costing systems
• Accounting information
• Managerial decision
• Process management
• Financial statement
• Cost concepts
• Managerial accounting basics
• Managerial cost
• Period costs
• Financial accounting
• Dynamic business environment
• Reporting manufacturing activities
• Accounting principles
• Fundamental accounting principles
• Lecture Fundamental accounting principles
• Relevant costing
• Accounting activities
• Business activities
• Income statement
• Accounting cycle
• Accounting for merchandising operations
• Merchandising operations
• Capital budgeting decisions
• Time value of money
• Income taxes
• After tax cost