Key Terms
the reporting of the cost of manufactured products. direct materials, direct labor, and factory overhead are reported as product costs
absorption costing
Sales were $750,000, the variable cost of goods sold was $400,000, the variable selling and administrative expenses were $90,000, and fixed costs were $200,000. The contribution margin was:
$260,000
variable costing is sometimes called ____ costing
direct costing
the cost of goods manufactured consists of the following three things:
- direct materials
- direct labor
- variable factory overhead
the difference between manufacturing margin and variable selling and administrative expenses
contribution margin
During a year in which the number of units manufactured is less than the number of units sold, the operating income reported under the variable costing concept would be, larger or smaller than the operating income reported under the absorption costing concept?
larger than the operating income reported under the absorption costing concept.
sometimes referred to as product mix
sales mix
which costing method consists of fixed factory overhead?
absorption costing
the difference between sales and variable cost of goods sold
manufacturing margin
Variable costs are $70 per unit and fixed costs are $150,000. Sales are estimated to be 10,000 units. How much would absorption costing operating income differ between a plan to produce 10,000 units and 12,000 units?
$25,000 greater for 12,000 units
which costing is required under the GAAP (generally accepted accounting principles)?
absorption costing
manufacturing margin = _____ - variable cost of goods sold
sales
the relative amount of sales among the various products
sales mix
Variable manufacturing costs are $13 per unit, and fixed manufacturing costs are $75,000. Sales are estimated to be 12,000 units. How much would absorption costing operating income differ between a plan to produce 12,000 units and a plan to produce 15,000 units?
$15,000 greater in producing 15,000 units.
what type of segment is a portion of a company that can be analyzed using sales, costs, and expenses to determine its profitability?
market segment
contribution margin = manufacturing margin - _______
variable selling and administrative expenses
the concept that considers the cost of products manufactured to be composed only of the manufacturing costs that increase or decrease as the volume of production rises or falls
variable costing
During the year in which the number of units manufactured exceeded the number of units sold, the operating income reported under the absorption costing concept would be, larger or smaller than the operating income reported under the variable costing concept?
larger than the operating income reported under the variable costing concept.
what is EBITDA?
EBITDA stands for earnings before interest, taxes, depreciation, and amortization.
? = contribution margin - fixed costs
operating income