Problem 9-18 (8th edition), with given information from the textbook:
This version of the problem is based on the given information from the textbook
All cells are formula driven, with the exception of the cells highlighted in yellow
January
February
Beginning Inventory
Beginning Inventory
Actual Production
1,000
Actual Production
Sales
700
Sales
Budgeting production
1,000
Budgeting production
Variable Manufacting cost/unit
900
Variable Manufacting cost/unit
Variable selling cost/unit
600
Variable selling cost/unit
Fixed Manufacturing costs - Standard
400,000
Fixed Manufacturing costs - Actual
Fixed Selling Costs
140,000
Fixed Selling Costs
Fixed Manufacturing costs - Budget
400,000
Fixed Manufacturing costs - Budget
Selling price per unit
3,000
Selling price per unit
ABSORPTION COSTING
Sales
2,100,000
COGS
Units
Beginning INV
Variable Manu. Costs
1,000
Fixed Manu. Costs:
1,000
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
Rate
1,300
Gross Margin
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
700
600
Operating Income
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
1,190,000
Gross Margin
420,000
140,000
560,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
630,000
Operating Income
400
900
400
1,300
400,000
400,000
-
2,100,000
Units
Rate
900
300
900
700
600
Gross Margin
Rate
1,300
600
900,000
900,000
270,000
630,000
420,000
1,050,000
1,050,000
Gross Margin
Gross Margin
480,000
140,000
620,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
660,000
Operating Income
900
400
1,300
400,000
320,000
80,000
2,400,000
Rate
900
300
900
800
600
Rate
Total
900
400
1,300
-
1,500
600
1,200,000
Gross Margin
900,000
140,000
1,040,000
1,610,000
400,000
1,000
400
900
400
1,300
400,000
500,000
-
VARIABLE COSTING
Sales
270,000
720,000
990,000
270,000
720,000
480,000
1,200,000
390,000
1,125,000
500,000
2,015,000
65,000
1,950,000
100,000
1,850,000
2,650,000
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
800
4,500,000
1,280,000
400
Units
ABSORPTION COSTING
Sales
COGS
Units
Beginning INV
Variable Manu. Costs
1,250
Fixed Manu. Costs:
1,250
COG Avaible
less: Ending INV
50
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
400,000
1,000
VARIABLE COSTING
Sales
300
1,250
1,500
1,000
900
600
400,000
140,000
400,000
3,000
390,000
720,000
320,000
1,430,000
390,000
1,040,000
80,000
1,120,000
Total
900
400
800
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
1,000
2,400,000
COGS
Units
Beginning INV
Variable Manu. Costs
800
Fixed Manu. Costs:
800
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
400,000
1,000
VARIABLE COSTING
Sales
ABSORPTION COSTING
Sales
900,000
400,000
1,300,000
390,000
910,000
910,000
Total
900
400
March
Beginning Inventory
Actual Production
Sales
Budgeting production
Variable Manufacting cost/unit
Variable selling cost/unit
Fixed Manufacturing costs - Actual
Fixed Selling Costs
Fixed Manufacturing costs - Budget
Selling price per unit
300
800
800
1,000
900
600
400,000
140,000
400,000
3,000
100,000
4,500,000
Rate
Total
1,250
900
50
900
1,500
600
270,000
1,125,000
1,395,000
45,000
1,350,000
900,000
2,250,000
2,250,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
Operating Income
510,000
Operating Income
660,000
Operating Income
1,710,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
510,000
630,000
120,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
660,000
660,000
-
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
1,710,000
1,610,000
100,000
Units
Fixed costs in opening INV
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
-
120,000
120,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
400
120,000
120,000
-
400,000
140,000
540,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
50
Abs costing - change in fixed costs in INV
Rate
Total
400
400
120,000
20,000
100,000
Problem 9-18 (8th edition), with given information from the textbook:
This version of the problem shows the effects of changes of Fixed costs/unit from year to year
All cells are formula driven, with the exception of the cells highlighted in yellow
January
February
Beginning Inventory
Beginning Inventory
Actual Production
1,000
Actual Production
Sales
700
Sales
Budgeting production
1,000 revised
Budgeting production
Variable Manufacting cost/unit
900
Variable Manufacting cost/unit
Variable selling cost/unit
600
Variable selling cost/unit
Fixed Manufacturing costs - Standard
400,000
Fixed Manufacturing costs - Actual
Fixed Selling Costs
140,000
Fixed Selling Costs
Fixed Manufacturing costs - Budget
400,000 revised
Fixed Manufacturing costs - Budget
Selling price per unit
3,000
Selling price per unit
ABSORPTION COSTING
Sales
2,100,000
COGS
Units
Beginning INV
Variable Manu. Costs
1,000
Fixed Manu. Costs:
1,000
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
Rate
1,300
Gross Margin
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
700
600
Operating Income
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
1,190,000
Gross Margin
420,000
140,000
560,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
630,000
Operating Income
400
900
400
1,300
400,000
400,000
-
2,100,000
Units
Rate
900
300
900
700
600
Gross Margin
Rate
1,320
600
900,000
900,000
270,000
630,000
420,000
1,050,000
1,050,000
Gross Margin
Gross Margin
480,000
140,000
620,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
666,000
Operating Income
900
420
1,320
400,000
336,000
64,000
2,400,000
Rate
900
300
900
800
600
Rate
Total
900
405
1,305
-
1,500
600
1,200,000
Gross Margin
900,000
140,000
1,040,000
1,604,250
400,950
990
405
900
405
1,305
400,000
506,250
-
VARIABLE COSTING
Sales
270,000
720,000
990,000
270,000
720,000
480,000
1,200,000
396,000
1,125,000
506,250
2,027,250
65,250
1,962,000
106,250
1,855,750
2,644,250
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
800
4,500,000
1,286,000
420
Units
ABSORPTION COSTING
Sales
COGS
Units
Beginning INV
Variable Manu. Costs
1,250
Fixed Manu. Costs:
1,250
COG Avaible
less: Ending INV
50
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
420,000
1,000
VARIABLE COSTING
Sales
300
1,250
1,500
990 revised
900
600
400,000
140,000
400,950 revised
3,000
390,000
720,000
336,000
1,446,000
396,000
1,050,000
64,000
1,114,000
Total
900
420
800
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
1,000
2,400,000
COGS
Units
Beginning INV
Variable Manu. Costs
800
Fixed Manu. Costs:
800
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
400,000
1,000
VARIABLE COSTING
Sales
ABSORPTION COSTING
Sales
900,000
400,000
1,300,000
390,000
910,000
910,000
Total
900
400
March
Beginning Inventory
Actual Production
Sales
Budgeting production
Variable Manufacting cost/unit
Variable selling cost/unit
Fixed Manufacturing costs - Actual
Fixed Selling Costs
Fixed Manufacturing costs - Budget
Selling price per unit
300
800
800
1,000 revised
900
600
400,000
140,000
420,000 revised
3,000
106,250
4,500,000
Units
Rate
Total
1,250
900
50
900
1,500
600
270,000
1,125,000
1,395,000
45,000
1,350,000
900,000
2,250,000
2,250,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
Operating Income
510,000
Operating Income
660,000
Operating Income
1,710,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
510,000
630,000
120,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
660,000
666,000
6,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
1,710,000
1,604,250
105,750
Units
Fixed costs in opening INV
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
-
120,000
120,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
420
-
120,000
126,000
6,000
400,000
140,000
540,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
50
Abs costing - change in fixed costs in INV
Rate
Total
420
405
126,000
20,250
105,750
Problem 9-18 (8th edition), with given information from the textbook:
This version of the problem shows how producing one extra unit in May results in an increase in profit when using Absorption costing
All cells are formula driven, with the exception of the cells highlighted in yellow
January
February
Beginning Inventory
Beginning Inventory
300
Actual Production
1,000
Actual Production
800
Sales
700
Sales
800
Budgeting production
1,000
Budgeting production
1,000
Variable Manufacting cost/unit
900
Variable Manufacting cost/unit
900
Variable selling cost/unit
600
Variable selling cost/unit
600
Fixed Manufacturing costs - Standard
400,000
Fixed Manufacturing costs - Actual
400,000
Fixed Selling Costs
140,000
Fixed Selling Costs
140,000
Fixed Manufacturing costs - Budget
400,000
Fixed Manufacturing costs - Budget
400,000
Selling price per unit
3,000
Selling price per unit
3,000
ABSORPTION COSTING
Sales
2,100,000
COGS
Units
Beginning INV
Variable Manu. Costs
1,000
Fixed Manu. Costs:
1,000
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
Rate
1,300
Gross Margin
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
700
600
Operating Income
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
COGS
Units
Beginning INV
Variable Manu. Costs
800
Fixed Manu. Costs:
800
COG Avaible
less: Ending INV
300
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
1,190,000
Gross Margin
420,000
140,000
560,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
630,000
Operating Income
400,000
1,000
400
900
400
1,300
400,000
400,000
-
VARIABLE COSTING
Sales
2,100,000
Units
Rate
900
300
900
700
600
Gross Margin
Rate
1,300
600
900,000
900,000
270,000
630,000
420,000
1,050,000
1,050,000
Gross Margin
Gross Margin
480,000
140,000
620,000
Period Costs
Variable sales costs
Fixed sales costs
Total Period Costs
660,000
Operating Income
900
400
1,300
400,000
320,000
80,000
2,400,000
Rate
900
300
900
800
600
Rate
Total
900
400
1,300
-
1,500
600
1,200,000
Gross Margin
900,000
140,000
1,040,000
1,610,400
400,000
1,000
400
900
400
1,300
400,000
500,400
-
VARIABLE COSTING
Sales
270,000
720,000
990,000
270,000
720,000
480,000
1,200,000
390,000
1,125,900
500,400
2,016,300
66,300
1,950,000
100,400
1,849,600
2,650,400
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
800
4,500,000
1,280,000
400
Units
ABSORPTION COSTING
Sales
COGS
Units
Beginning INV
Variable Manu. Costs
1,251
Fixed Manu. Costs:
1,251
COG Avaible
less: Ending INV
51
COGS b/f adjustments
Adj. for over/under (see below)
total COGS
400,000
1,000
VARIABLE COSTING
Sales
300
1,251 revised
1,500
1,000
900
600
400,000
140,000
400,000
3,000
390,000
720,000
320,000
1,430,000
390,000
1,040,000
80,000
1,120,000
Total
900
400
800
Fixed Manufactuing Costs per Unit:
Total estimated fixed cost
Total estimated proudction
Allocated fixed cost/unit
Value of ending Inventory per unit
Variable Cost per unit
Fixed Cost per unit
Total cost per unit
adj for under/over applied fixed OH
Actual Fixed Overhead
Applied Fixed Ovehead
under (over) applied fixed O/H
Variable Costs
Variable COGS
Beginning INV
Variable Manu. Costs
COG Avaible
less: Ending INV
total COGS
Variable selling costs
total Variable costs
Total
1,000
2,400,000
900,000
400,000
1,300,000
390,000
910,000
910,000
Total
900
400
ABSORPTION COSTING
Sales
March
Beginning Inventory
Actual Production
Sales
Budgeting production
Variable Manufacting cost/unit
Variable selling cost/unit
Fixed Manufacturing costs - Actual
Fixed Selling Costs
Fixed Manufacturing costs - Budget
Selling price per unit
100,400
4,500,000
Units
Rate
Total
1,251
900
51
900
1,500
600
270,000
1,125,900
1,395,900
45,900
1,350,000
900,000
2,250,000
2,250,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
400,000
140,000
540,000
Fixed Costs
Actual Fixed Overhead
Fixed sales costs
Total fixed costs
Operating Income
510,000
Operating Income
660,000
Operating Income
1,710,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
510,000
630,000
120,000
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
660,000
660,000
-
RECONCILIATION
net income: Variable costing
net income: Absorption costing
Difference
1,710,000
1,610,400
99,600
Units
Fixed costs in opening INV
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
-
120,000
120,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
300
Abs costing - change in fixed costs in INV
Rate
Total
400
400
120,000
120,000
-
400,000
140,000
540,000
Units
Fixed costs in opening INV
300
Fixed costs in ending INV
51
Abs costing - change in fixed costs in INV
Rate
Total
400
400
120,000
20,400
99,600