ariable Costing Income Statement On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (4,900 units) $171,500 Cost of goods sold: Cost of goods manufactured (5,600 units) $140,000 Inventory, April 30 (800 units) (20,000) Total cost of goods sold (120,000) Gross profit $51,500
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Variable Costing Income Statement
On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept:
| Joplin Company Absorption Costing Income Statement For the Month Ended April 30 |
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| Sales (4,900 units) | $171,500 | ||
| Cost of goods sold: | |||
| Cost of goods manufactured (5,600 units) | $140,000 | ||
| Inventory, April 30 (800 units) | (20,000) | ||
| Total cost of goods sold | (120,000) | ||
| Gross profit | $51,500 | ||
| Selling and administrative expenses | (28,560) | ||
| Operating income | $22,940 |
If the fixed
Joplin CompanyVariable Costing Income StatementFor the Month Ended April 30
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$Sales | |
| Variable cost of goods sold: | ||
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$Variable cost of goods manufactured | |
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Inventory, April 30 | |
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Total variable cost of goods sold | |
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$Manufacturing margin | |
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Variable selling and administrative expenses | |
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$Contribution margin | |
| Fixed costs: | ||
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$Fixed manufacturing costs | |
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Fixed selling and administrative expenses | |
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Total fixed costs | |
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$Operating income |
A variable costing income statement subtracts all variable expenses from revenue to arrive at a separately stated contribution margin, which is then subtracted from all fixed expenses to arrive at the period's net profit or loss. When you want to determine the proportion of expenses that truly varies directly with revenue, it is useful to create an income statement in variable costing format. In many cases, the contribution margin will be significantly higher than the gross margin because so many of a company's production costs are fixed and so few of its selling and administrative expenses are variable. This means that the variable costing income statement is organized around the variability of the underlying cost data rather than the functional areas or expense categories found in a traditional income statement.
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