tailieunhanh - Lecture Managerial accounting (15/e): Chapter 6A - Garrison, Noreen, Brewer

Chapter 6A - Super-variable costing. This chapter prepare an income statement using super-variable costing and reconcile this approach with variable costing. After studying this chapter, you should be able to prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions, compute companywide and segment break-even points for a company with traceable fixed costs. | Super-variable Costing Appendix 6A Learning Objective 6 (Appendix 6A) Prepare an income statement using super-variable costing and reconcile this approach with variable costing. Overview of Variable and Super-variable Costing Direct Materials Direct Labor Fixed Manufacturing Overhead Fixed Selling and Administrative Expenses Variable Costing Super- variable Costing Product Costs Period Costs Product Cost Period Costs Super-variable costing classifies all direct labor and manufacturing overhead costs as fixed period costs and only direct materials as a variable product cost. To simplify, in this appendix we also assume that selling and administrative expenses are entirely fixed. Unit Cost Computations Harvey Company produces a single product with the following information available: Unit product cost is determined as follows: Unit Cost Computations Under super-variable costing, only the direct material costs are included in product costs. Under variable costing, direct materials and direct labor are included when determining unit product cost. 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 is no beginning inventory. Now, let’s compute net operating income using both super-variable and variable costing. Variable and Super-variable Costing Income Statements Super-variable Costing Contribution Format Income Statement Direct material costs only. All direct labor costs are expensed. Direct material and direct labor costs. Direct labor cost deferred in inventory is 5,000 units × $3 = $15,000. Variable Costing Contribution Format Income Statement Comparing the Two Methods Direct labor $75,000 Units produced 25,000 units = = $3 per unit We can reconcile the difference between super-variable and variable income as follows: Comparing the Two Methods Extended Comparisons of Income Data Harvey Company – Year Two Since the variable costs per unit, total fixed costs, and the number of units produced remained unchanged, the unit cost computations also remain unchanged. Unit Cost Computations Direct material costs only. All direct labor costs are expensed. Super-variable Costing Contribution Format Income Statement Variable Costing Contribution Format Income Statement Direct material and direct labor costs. Direct labor cost released from inventory is 5,000 units × $3 = $15,000. Comparing the Two Methods Direct labor $75,000 Units produced 25,000 units = = $3 per unit We can reconcile the difference between super-variable and variable income as follows: Comparing the Two Methods End of Appendix 6A