What is variable costing?
Variable costing is the modern method of calculating product cost per unit.
Variable costing is the modern method of calculating product cost per unit and operating income. This method treats fixed costs as sunk costs. Also, variable costing calculates contribution margin instead of gross profit.
The main difference is absorption costing also considers fixed manufacturing overhead as product cost, whereas variable cost considers it as period cost.
Analyzing profitability analysis, service company Burlington Internet Services is an Internet service provider for commercial and residential customers. The company provided the following data for its two types of customers for the month of August:
For each type of customer, determine both the contribution margin per customer and the contribution margin ratio. Round to two decimal places.
Which type of service is more profitable?
Analyzing profitability Refer to Short Exercise S21-10. Which business segment provided the greatest total contribution margin? Which
business segment had the highest contribution margin ratio?
Camden Company has divided its business into segments based on sales territories: East Coast, Midland, and West Coast. Following are financial data for 2018:
Sales price per unit
Variable cost per unit
Computing inventory balances
Zeng Company reports the following data:
Finished Goods Inventory:
Beginning balance, in units 300 Units
Units sold (1,600)
Ending balance, in units 1,600
Production Costs: Variable manufacturing costs per unit $ 57
Total fixed manufacturing costs 26,100
Calculate the product cost per unit and the total cost of the 1,600 units in ending inventory using absorption costing and variable costing.
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