- This topic has 3 replies, 2 voices, and was last updated 6 years, 5 months ago by .
-
Topic
-
So let me get this straight on the concepts of absorption costing/variable costing and gross margin/contribution margin.
In absorption costing, the inventoriable costs are the manufacturing costs, regardless of whether they are variable or fixed.
And the CGS in the calculation of gross profit, CGS = variable + fixed manufacturing cost = product cost
In variable costing, the inventoriable costs are the variable manufacturing costs. That leaves period costs to fixed manufacturing, fixed S&A and variable S&A, right?
However, the contribution margin is calculated not by (sales – inventoriable costs in variable costing), because all variable costs are deducted—it’s sales – (variable manufacturing + variable non manufacturing (s&A)), right?
Holy smoke, now I know. This was the part that confused me to hell.
FAR-80AUD-77
REG-75
BEC-82
I'm done done!
- You must be logged in to reply to this topic.