2. The break-even point under variable costing would be:
Fixed costs
Break-even point =
Unit contribution margin
$760,000 $760,000
= = = 76,000 units
$25-($9+$6) $10 per unit
On the surface this answer appears to be incorrect, since the company
sold less than 76,000 units in both July and August and yet showed a
profit in both months on the absorption costing statements. In fact,
when a student gives an answer of 76,000 units as the break-even
point, you should ask, “How can 76,000 units be the break-even point
when the company sold only 70,000 units in July and 75,000 units in
August and reported a profit in both months?”
The answer to this apparent inconsistency is that production exceeded
sales in both July and August. This resulted in deferring a portion of the
fixed manufacturing overhead costs of these months to the future rather
than showing the cost as an expense on the income statement. In each
month, this deferral of fixed manufacturing overhead cost was large
enough to permit the company to report a profit, even though less than
the break-even volume of units was sold.
Bạn đang xem 2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH07 VARIBLE COSSTING TOOL FOR MANAGEMENT