MAC2601
FORMATS
WITH CALCULATIONS
, Statement of Profit/Loss & Other Comprehensive Income Statement of Profit/Loss & Other Comprehensive Income
Absorption costing method: Direct costing method
R R
Sales/Revenue (Units sold x Unit price) Sales/Revenue (Units sold x Unit price)
Less: Manufacturing cost of sales: Variable cost of sales
Opening Inventory ① Opening inventory ①
Manufacturing cost Variable manufacturing cost
Variable Cost of goods available for sale
Fixed Less: Closing inventory ②
Cost of goods available for sale
Less: Closing inventory ② Variable manufacturing cost of sales
Gross Profit (Sales ‐ Cost of sales) Variable selling and distribution cost
Less: Selling & administative costs: Contribution (Sales ‐ Variable cost of sales)
Variable (sales units x selling cost per unit)
Fixed Less: Fixed cost
Net profit (Gross profit ‐ Selling & Administrative costs) Manufacturing overheads
Selling and distribution costs
Administrative cost
Net profit (Contribution ‐ Fixed cost)
Opening: Units of closing inventory (previous year) Opening:
① x manufacturing cost (previous year) ① Variable cost per unit x units of closing inventory (previous year)
(Both) Units manufactured (previous year) (Both)
Closing: Units of closing inventory Closing: Units of closing inventory variable cost of goods available for
② x manufacturing cost ② x
FIFO Units manufactured FIFO Units available for sale sale
Closing: Units of closing inventory Closing:
x value of goods available for sale Variable cost per unit x units of closing inventory this year)
WAM Units available for sale WAM
If there is no opening or closing inventory on hand, the statement drafted above will result in the same net profit.
NOTE: If there is a closing inventory, absorption costing profit > direct costing profit
, Reconciled budgeted net profit
Net profit according to:
Direct costing method
Absorption costing method
Difference to be reconciled
Opening inventory according to:
Direct costing method
Absorption costing method
Difference
Closing inventory according to:
Direct costing method
Absorption costing method
Difference
Reconciliation in rand value
Opening inventory difference
Closing inventory difference
Difference in profits
Reconciliation in units
Fixed cost in opening inventory
Fixed cost in closing inventory
Difference
FORMATS
WITH CALCULATIONS
, Statement of Profit/Loss & Other Comprehensive Income Statement of Profit/Loss & Other Comprehensive Income
Absorption costing method: Direct costing method
R R
Sales/Revenue (Units sold x Unit price) Sales/Revenue (Units sold x Unit price)
Less: Manufacturing cost of sales: Variable cost of sales
Opening Inventory ① Opening inventory ①
Manufacturing cost Variable manufacturing cost
Variable Cost of goods available for sale
Fixed Less: Closing inventory ②
Cost of goods available for sale
Less: Closing inventory ② Variable manufacturing cost of sales
Gross Profit (Sales ‐ Cost of sales) Variable selling and distribution cost
Less: Selling & administative costs: Contribution (Sales ‐ Variable cost of sales)
Variable (sales units x selling cost per unit)
Fixed Less: Fixed cost
Net profit (Gross profit ‐ Selling & Administrative costs) Manufacturing overheads
Selling and distribution costs
Administrative cost
Net profit (Contribution ‐ Fixed cost)
Opening: Units of closing inventory (previous year) Opening:
① x manufacturing cost (previous year) ① Variable cost per unit x units of closing inventory (previous year)
(Both) Units manufactured (previous year) (Both)
Closing: Units of closing inventory Closing: Units of closing inventory variable cost of goods available for
② x manufacturing cost ② x
FIFO Units manufactured FIFO Units available for sale sale
Closing: Units of closing inventory Closing:
x value of goods available for sale Variable cost per unit x units of closing inventory this year)
WAM Units available for sale WAM
If there is no opening or closing inventory on hand, the statement drafted above will result in the same net profit.
NOTE: If there is a closing inventory, absorption costing profit > direct costing profit
, Reconciled budgeted net profit
Net profit according to:
Direct costing method
Absorption costing method
Difference to be reconciled
Opening inventory according to:
Direct costing method
Absorption costing method
Difference
Closing inventory according to:
Direct costing method
Absorption costing method
Difference
Reconciliation in rand value
Opening inventory difference
Closing inventory difference
Difference in profits
Reconciliation in units
Fixed cost in opening inventory
Fixed cost in closing inventory
Difference
