BUS 215 Exam 2 || A+ GRADED.
variable costing income statements correct answers includes product and period costs
categorizes expenses based on cost behavior (reported separately from fixed expenses)
focuses and separates variable and fixed expenses
calculates CM
manufacturing companies: rely on contribution format for internal decision-making purposes
to enable CVP analysis and facilitate explaining changes in net income
Absorption Costing Income Statement correct answers generally used for external reports
ignore variable and fixed cost distinctions
categorizes costs by function- manufacturing versus selling and administrative
focuses and separates product and period costs
calculates gross margin by deducting cost of goods sold from sales
selling and administrative expenses reporting as a single amount and equal the amounts
reported on a variable costing income statement
Sales Revenue
-COGS (DM, DL, VOH, FOH)
=Gross profit
-Selling and administrative expenses (including variable and fixed selling admin. expenses
=NOI
segmant correct answers part or activity of an organization about which managers would like
cost, revenue, or profit data
Variable Costing correct answers only those manufacturing costs that vary with output are
treated as product costs (usually includes direct materials, direct labor, and the variable
portion of manufacturing overhead)
sometimes referred to as direct costing or marginal costing
fixed manufacturing overhead costs are considered to be period costs (like selling and
administrative costs) and are taken immediately to the income statement as period expenses
A costing method that includes only variable manufacturing costs—direct materials, direct
labor, and variable manufacturing overhead—in unit product costs.
Absorption Costing correct answers treats all manufacturing costs as product costs, regardless
of whether they are variable or fixed
, cost of a unit of product under this consists of direct materials, direct labor, and both variable
and fixed manufacturing overhead
allocated a portion of fixed manufacturing overhead cost to each unit of product, along with
variable manufacturing costs
frequently referred to as the full cost method
required by GAAP and IFRS and used by most companies for both internal and external
reports
fixed manufacturing overhead costs are included in work in process inventory. when units are
completed, these costs are transferred to finished good
assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing
overhead) to inventory
selling and administrative expenses correct answers never treated as product costs, regardless
of costing method
on an absorption costing income statement: reported as a single amount, and equal the
amount reported on a variable costing income statement
variable costing CM format income statements correct answers sales
variable expenses
- variable cost of goods sold
- variable selling and administrative expense
Total variable expenses
CM
fixed expenses
- fixed manufacturing overhead
- fixed selling and administrative expense
total fixed expenses
net operating income (loss)
fixed manufacturing overhead cost per unit formula correct answers fixed manufacturing
overhead cost / # of units produced
absorption costing income statement format correct answers sales
- cost of goods sold
gross margin
selling and administrative expenses
net operating income (loss)
absorption costing net income formula correct answers selling and administrative expense -
gross margin
Gross Margin Formula correct answers Net Sales - COGS
variable costing income statements correct answers includes product and period costs
categorizes expenses based on cost behavior (reported separately from fixed expenses)
focuses and separates variable and fixed expenses
calculates CM
manufacturing companies: rely on contribution format for internal decision-making purposes
to enable CVP analysis and facilitate explaining changes in net income
Absorption Costing Income Statement correct answers generally used for external reports
ignore variable and fixed cost distinctions
categorizes costs by function- manufacturing versus selling and administrative
focuses and separates product and period costs
calculates gross margin by deducting cost of goods sold from sales
selling and administrative expenses reporting as a single amount and equal the amounts
reported on a variable costing income statement
Sales Revenue
-COGS (DM, DL, VOH, FOH)
=Gross profit
-Selling and administrative expenses (including variable and fixed selling admin. expenses
=NOI
segmant correct answers part or activity of an organization about which managers would like
cost, revenue, or profit data
Variable Costing correct answers only those manufacturing costs that vary with output are
treated as product costs (usually includes direct materials, direct labor, and the variable
portion of manufacturing overhead)
sometimes referred to as direct costing or marginal costing
fixed manufacturing overhead costs are considered to be period costs (like selling and
administrative costs) and are taken immediately to the income statement as period expenses
A costing method that includes only variable manufacturing costs—direct materials, direct
labor, and variable manufacturing overhead—in unit product costs.
Absorption Costing correct answers treats all manufacturing costs as product costs, regardless
of whether they are variable or fixed
, cost of a unit of product under this consists of direct materials, direct labor, and both variable
and fixed manufacturing overhead
allocated a portion of fixed manufacturing overhead cost to each unit of product, along with
variable manufacturing costs
frequently referred to as the full cost method
required by GAAP and IFRS and used by most companies for both internal and external
reports
fixed manufacturing overhead costs are included in work in process inventory. when units are
completed, these costs are transferred to finished good
assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing
overhead) to inventory
selling and administrative expenses correct answers never treated as product costs, regardless
of costing method
on an absorption costing income statement: reported as a single amount, and equal the
amount reported on a variable costing income statement
variable costing CM format income statements correct answers sales
variable expenses
- variable cost of goods sold
- variable selling and administrative expense
Total variable expenses
CM
fixed expenses
- fixed manufacturing overhead
- fixed selling and administrative expense
total fixed expenses
net operating income (loss)
fixed manufacturing overhead cost per unit formula correct answers fixed manufacturing
overhead cost / # of units produced
absorption costing income statement format correct answers sales
- cost of goods sold
gross margin
selling and administrative expenses
net operating income (loss)
absorption costing net income formula correct answers selling and administrative expense -
gross margin
Gross Margin Formula correct answers Net Sales - COGS
