Penentuan Kos Variabel PERTEMUAN 7 Dr Rilla Gantino

Penentuan Kos Variabel PERTEMUAN 7 Dr Rilla Gantino, SE. , Ak. , MM Prodi Akuntansi- FEB

KEMAMPUAN AKHIR YANG DIHARAPKAN Mahasiswa dapat menjelaskan : pengertian, manfaat dan pandangan harga pokok variabel, perbedaan antara harga pokok variabel dan Full Costing. , manfaat informasi yang dapat diperoleh dari penentuan harga pokok variabel, dan penentuan harga pokok variabel di dalam perencanaan dan pembuatan keputusan jangka pendek

Managerial Accounting by James Jiambalvo Chapter 5: Variable Costing Slides Prepared by: Scott Peterson Northern State University

Full (Absorption) Costing 1. 2. 3. Full (Absorption) Costing includes: a. Direct material b. Direct labor c. Manufacturing overhead (both variable and fixed) Decision making and “what-if” decisions are difficult because of the commingling of fixed and variable overhead. Required for GAAP.

Variable Costing 1. 2. 3. Variable Costing includes: a. Direct material b. Direct labor c. Variable Manufacturing overhead Variable Costing lends itself well to decision making and “what-if” analyses. Not allowed for GAAP.

Differences Between Full (Absorption) and Variable Costing 1. 2. 3. Fixed manufacturing overhead (included in Full Costing). Fixed manufacturing costs, like depreciation, are a period expense on the income statement under variable costing. Fixed manufacturing costs, like depreciation, are inventoried until sold under full costing.

Variable Costing Income Statement 1. The format uses a contribution margin approach. 2. All costs, manufacturing, selling and administrative, are classified as either fixed or variable.

Variable Costing Income Statement Example Sales $100, 000 Less Variable: Variable COGS $20, 000 Variable Selling 10, 000 Variable Admin. 5, 000 35, 000 Contribution Margin 65, 000 Less Fixed: Fixed Mfg. 10, 000 Fixed Selling 8, 000 Fixed Admin 7, 000 25, 000 Net Income 40, 000

Full (Absorption) Costing Income Statement Example Sales Less COGS Gross Margin Less Selling and Admin: Selling 18, 000 Admin 12, 000 Net Income $100, 000 30, 000 70, 000 30, 000 40, 000

Effects of Production on Income for Full Versus Variable Costing: Clausen Tube Facts: § 5, 000 units produced and sold § Selling Price: $2, 000 per unit § Variable Manufacturing: § Direct Materials: $600 per unit § Direct Labor: $225 per unit § Variable MFG: $75 per unit § Fixed Manufacturing: $1, 200, 000 per year § Selling Expense: $40 per unit variable plus $100, 000 fixed. § Administrative: $500, 000 per year (fixed)

Clausen Tube Income Statement: Full Costing Sales $10, 000 Less COGS 5, 700, 000 Gross Margin 4, 300, 000 Less Selling and Admin: Selling $300, 000 Admin 500, 000 800, 000 Net Income $3, 500, 000

Clausen Tube Income Statement: Variable Costing Sales $10, 000 Less Variable: Variable COGS $4, 500, 000 Variable Selling and Admin 200, 000 Contribution Margin 5, 300, 000 Less Fixed: Fixed Mfg. 1, 200, 000 Fixed Selling 100, 000 Fixed Admin 500, 000 1, 800, 000 Net Income $3, 500, 000

Variable Costing Income Statement: Considerations 1. When sales volume and production volume are exactly equal, net income is the same under either full or variable costing. 2. Contribution margin is easily calculated under variable costing: 2, 000 – 940 = 1, 060. 3. Contribution margin ratio is: 1, 060 / 2, 000 = 53%

Clausen Tube: Production is Greater Than Sales Facts: § 6, 000 units produced and 4, 800 units sold § Selling Price: $2, 000 per unit § Variable Manufacturing: § Direct Materials: $600 per unit § Direct Labor: $225 per unit § Variable MFG: $75 per unit § Fixed Manufacturing: $1, 200, 000 per year § Selling Expense: $40 per unit variable plus $100, 000 fixed. § Administrative: $500, 000 per year (fixed)

Clausen Tube Income Statement: Full Costing-- Production > Sales Less COGS Gross Margin Less Selling and Admin: Selling $292, 200 Admin 500, 000 Net Income $ 9, 600, 000 5, 280, 000 4, 320, 000 792, 200 $3, 528, 000

Clausen Tube Income Statement: Variable Costing-- Production > Sales $ 9, 600, 000 Less Variable: Variable COGS $4, 320, 000 Variable Selling and Admin 192, 000 Contribution Margin 5, 088, 000 Less Fixed: Fixed Mfg. 1, 200, 000 Fixed Selling 100, 000 Fixed Admin 500, 000 1, 800, 000 Net Income $3, 288, 000

Variable Costing Income Statement: Considerations-- Production > Sales 1. Net income is higher under full costing than variable costing. 2. $3, 528, 000 vs. $3, 288, 000 = $240, 000 3. The $240, 000 difference is due to the 1, 200 (6, 000 – 4, 800) additional units produced and unsold. 4. Fixed manufacturing $1, 200, 000 / 6, 000 units x 1, 200 units remaining = $240, 000

Summary of Effects of Production on Net Income Ø If units produced = units sold, then no difference between full costing and variable costing net income. Ø If units produced > units sold, then full costing net income is greater than variable costing net income. Ø If units produced < units sold, then full costing net income is less than variable costing net income.

Impact of JIT on the Income Effects of Full Versus Variable Costing 1. JIT (Just-In-Time) inventory systems lead to low inventories. 2. Results in little difference between production and sales. 3. Variable versus absorption net income differences negligible.

Benefits of Variable Costing for Internal Reporting 1. Variable costing facilitates C-V-P analysis because it uses a “contribution” approach. 2. Variable costing mitigates the effects of earnings management because fixed manufacturing costs are not inventoried. Thus, merely increasing production volume relative to sales will not boost net income.

Quick Review Question #1 1. Which of the following lends itself well to C-V-P Analysis? a. Full Costing b. Absorption Costing c. Variable Costing d. Average Costing

Quick Review Answer #1 1. Which of the following lends itself well to C-V-P Analysis? a. Full Costing b. Absorption Costing c. Variable Costing d. Average Costing

Quick Review Question #2 2. Units produced = 2, 000, units sold = 1, 800, contribution margin ratio is 37%, fixed S & A expenses are $90, 000. Fixed mfg. Expenses are $80, 200 By how much is net income greater under full costing than variable costing? a. $8, 020 b. $80, 200 c. $9, 000 d. $17, 020

Quick Review Answer #2 2. Units produced = 2, 000, units sold = 1, 800, contribution margin ratio is 37%, fixed S & A expenses are $90, 000. Fixed mfg. Expenses are $80, 200 By how much is net income greater under full costing than variable costing? a. $8, 020 b. $80, 200 c. $9, 000 d. $17, 020

Quick Review Question #3 3. Which of the following complies with GAAP for external reporting purposes? a. Absolute costing b. Variable costing c. Fixed costing d. Absorption costing

Quick Review Answer #3 3. Which of the following complies with GAAP for external reporting purposes? a. Absolute costing b. Variable costing c. Fixed costing d. Absorption costing

Quick Review Question #4 4. Which of the following lends itself well to internal decision making? a. Full costing b. Variable costing c. Absorption costing d. None of these

Quick Review Answer #4 4. Which of the following lends itself well to internal decision making? a. Full costing b. Variable costing c. Absorption costing d. None of these

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Learning Objective 1 Explain how variable costing differs from absorption costing and compute unit product costs under each method.

Overview of Absorption and Variable Costing Absorption Costing Variable Costing Direct Materials Product Costs Direct Labor Product Costs Variable Manufacturing Overhead Fixed Manufacturing Overhead Period Costs Variable Selling and Administrative Expenses Fixed Selling and Administrative Expenses Period Costs

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. . .

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: Under absorption costing, all production costs, variable and fixed, are included when determining unit product cost. Under variable costing, only the variable production costs are included in product costs.

Learning Objective 2 Prepare income statements using both variable and absorption costing.

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 is no beginning inventory. Now, let’s compute net operating income using both absorption and variable costing.

Absorption Costing Fixed manufacturing overhead deferred in inventory is 5, 000 units × $6 = $30, 000.

Variable Costing Variable manufacturing costs only. All fixed manufacturing overhead is expensed.

Learning Objective 3 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.

Comparing the Two Methods

Comparing the Two Methods We can reconcile the difference between absorption and variable income as follows: Fixed mfg. overhead $150, 000 = = $6 per unit Units produced 25, 000 units

Extended Comparisons of Income Data Harvey Company – Year Two

Unit Cost Computations Since the variable costs per unit, total fixed costs, and the number of units produced remained unchanged, the unit cost computations also remain unchanged.

Absorption Costing Unit product cost. Fixed manufacturing overhead released from inventory is 5, 000 units × $6 = $30, 000.

Variable Costing Variable manufacturing costs only. All fixed manufacturing overhead is expensed.

Comparing the Two Methods We can reconcile the difference between absorption and variable income as follows: Fixed mfg. overhead $150, 000 = = $6 per unit Units produced 25, 000 units

Comparing the Two Methods

Summary of Key Insights

Learning Objective 4 Understand the advantages and disadvantages of both variable and absorption costing.

Impact on the Manager Opponents of absorption costing argue that shifting fixed manufacturing overhead costs between periods can lead to faulty decisions. These opponents argue that variable costing income statements are easier to understand because net operating income is only affected by changes in unit sales. This produces net operating income figures that are consistent with managers’ expectations.

CVP Analysis, Decision Making and Absorption costing does not dovetail with CVP analysis, nor does it support decision making. It treats fixed manufacturing overhead as a variable cost. It assigns per unit fixed manufacturing overhead costs to production. Treating fixed manufacturing overhead as a variable cost can: • Lead to faulty pricing decisions and faulty keep-or-drop decisions. Assigning per unit fixed manufacturing overhead costs to production can: • Potentially produce positive net operating income even when the number of units sold is less than the breakeven point.

External Reporting and Income Taxes To conform to GAAP requirements, absorption costing must be used for external financial reports in the Under the Tax United States. Reform Act of 1986, absorption costing must be used when filling out Since top executives income tax returns. are typically evaluated based on earnings reported to shareholders in external reports, they may feel that decisions should be based on absorption costing data.

Advantages of Variable Costing and the Contribution Approach Management finds it more useful. Advantages Impact of fixed costs on profits emphasized. Consistent with CVP analysis. Net operating income is closer to net cash flow. Consistent with standard costs and flexible budgeting. Easier to estimate profitability of products and segments. Profit is not affected by changes in inventories.

Variable versus Absorption Costing Fixed manufacturing costs must be assigned to products to properly match revenues and costs. Fixed manufacturing costs are capacity costs and will be incurred even if nothing is produced. Variable Costing

Variable Costing and the Theory of Constraints (TOC) Companies involved in TOC use a form of variable costing. However, one difference of the TOC approach is that it treats direct labor as a fixed cost for three reasons: Many companies have a commitment to guarantee workers a minimum number of paid hours. Direct labor is usually not the constraint. TOC emphasizes the role direct laborers play in driving continuous improvement. Since layoffs often devastate morale, managers involved in TOC are extremely reluctant to lay off employees.

Impact of Lean Production When companies use Lean Production. . . Production tends to equal sales. . . So, the difference between variable and absorption income tends to disappear.