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. Full (Absorption) Costing includes:
a. Direct material
b. Direct labor
c. Manufacturing overhead (both
variable and fixed)
2. Decision making and “what-if”
decisions are difficult because of the
commingling of fixed and variable
overhead.
3. Required for GAAP.
Variable Costing
1. Variable Costing includes:
a. Direct material
b. Direct labor
c. Variable Manufacturing overhead
2. Variable Costing lends itself well to
decision making and “what-if”
analyses.
3. Not allowed for GAAP.
Differences Between Full
(Absorption) and Variable Costing
1. Fixed manufacturing overhead
(included in Full Costing).
2. Fixed manufacturing costs, like
depreciation, are a period
expense on the income statement
under variable costing.
3. 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
$100,000
Less COGS 30,000
Gross Margin 70,000
Less Selling and Admin:
Selling 18,000
Admin 12,000
30,000
Net Income
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 $10,000,000
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 $10,000,000
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
Sales $ 9,600,000
Less COGS 5,280,000
Gross Margin 4,320,000
Less Selling and Admin:
Selling $292,200
Admin 500,000 792,200
Net Income $3,528,000
Clausen Tube Income Statement:
Variable Costing-- Production > Sales
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
 If units produced = units sold, then no
difference between full costing and
variable costing net income.
 If units produced > units sold, then full
costing net income is greater than
variable costing net income.
 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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TAMBAHAN
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 Variable
Costing Costing
Direct Materials
Product
Product Direct Labor
Costs
Costs Variable Manufacturing Overhead

Fixed Manufacturing Overhead

Period
Period Variable Selling and Administrative Expenses
Costs
Costs Fixed Selling and Administrative Expenses
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
Variable Costing
costs only.
Sales (20,000 × $30) $ 600,000
Less variable expenses:
Beginning inventory $ -
Add COGM (25,000 × $10) 250,000
All fixed
Goods available for sale 250,000 manufacturing
Less ending inventory (5,000 × $10) 50,000 overhead is
Variable cost of goods sold 200,000 expensed.
Variable selling & administrative
expenses (20,000 × $3) 60,000 260,000
Contribution margin 340,000
Less fixed expenses:
Manufacturing overhead $ 150,000
Selling & administrative expenses 100,000 250,000
Net operating income $ 90,000
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:

Variable costing net operating income $ 90,000

Add: Fixed mfg. overhead costs
deferred in inventory
(5,000 units × $6 per unit) 30,000
Absorption costing net operating income $ 120,000

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.Absorption Costing
Sales (30,000 × $30) $ 900,000
Less cost of goods sold:
Beg. inventory (5,000 × $16) $ 80,000
Add COGM (25,000 × $16) 400,000
Goods available for sale 480,000
Less ending inventory - 480,000
Gross margin 420,000
Less selling & admin. exp.
Variable (30,000 × $3) $ 90,000
Fixed 100,000 190,000
Net operating income $ 230,000

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:

Variable costing net operating income $ 260,000

Deduct: Fixed manufacturing overhead
costs released from inventory
(5,000 units × $6 per unit) 30,000
Absorption costing net operating income $ 230,000

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

Fixed manufacturing
costs must be assigned Fixed manufacturing
to products to properly costs are capacity costs
match revenues and and will be incurred
costs. 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.