Great explanation. Where this gets dangerous is when executives or people higher up in the company see the up and down profits / losses per in thr different periods snd then either praises or disciplines the teams for doing good or bad because they don't understand how this absorbtion costing works. Company shows a big loss,, uh oh, we must write up people and fire someone, company shows a profit, well, we much praise all these people who had nothing to do with any of that profit. Ask me how I know. 🤦
This video is great! Super explanatory. Can you do an example that takes into consideration production volume variances as well? Or any other variances that might occur?
hey bro don't know whether u will seeing this or not, but in cost accounting cost is always calculated on units produced then once we get cost per unit produced then it is calculated as a base line for cost of goods sold eg if cost per unit produced is 10$ then if u sell 500 units cost of sales for those 500 units would be 500*10 i.e 5000$ .
Dear Friends, I have a question: I want to setup Absorption costing of a product in year 2020. Next, I want to compare actual costing and Absorption costing in this product by month, year. How do I setup?.
Dear Friends, I have a question: 1/ In the absorption costing system, I think the difference between Absorbed cost and full costing. Absored cost = direct material + direct labor + variable overhead manufacturing + fixed overhead manufacturing for a product or a brand or a product line. full cost= Absored cost + all corporate-related expenses for all product or all brand or all product line. Could you help?. Thank you.
Hi there, I find it so confusing how you calculated the total FOH for 2021. I used the same method as you and we got the same exact answer for 2019 and 2020 but for 2021 I got 300,000 instead of 200,000. What I did was 150,000 / 5,000 = 30 x 10,000 = 300,000 which is how we solved for both previous years. I'm so confused.
I did the same thing and was also confused but then I realized... You should only be contributing that $30 MOH per unit to the 5000 sales that are yet to be inventoried in 2021. The 5000 in beginning inventory have already been cost in the previous year manufacturing cycle at 5000*10=50,000 and the current year remaining sales of 5000 would be inventoried at 30 5000*30=150,000 in the current year manufacturing cycle. Add those together 50,000+150,000=200,000 and you get 2021 MOH.
I thought the same, dividing 150k in 5k gives u 3 then that times 10k gives u 300k, the thing is that I’ve even tried different ways to see how he could’ve obtained those 150k+50k but it was impossible.
I have been stuck on an assignment for variable and absorption cost accounting. This video helped a bunch! Thank you!
Great explanation. Where this gets dangerous is when executives or people higher up in the company see the up and down profits / losses per in thr different periods snd then either praises or disciplines the teams for doing good or bad because they don't understand how this absorbtion costing works. Company shows a big loss,, uh oh, we must write up people and fire someone, company shows a profit, well, we much praise all these people who had nothing to do with any of that profit. Ask me how I know. 🤦
how do you know?
@Edspira, While calculating the Direct Material used for 2020, why we didn't multiply the Direct Material cost with the Productuon units?
This video is great! Super explanatory. Can you do an example that takes into consideration production volume variances as well? Or any other variances that might occur?
While calculating the Direct Material used for 2020, why we didn't multiply the Direct Material cost with the Productuon units?
Excellent
why is the cost being calculated on units sold and not units produced?
wondering the same aswell
hey bro don't know whether u will seeing this or not, but in cost accounting cost is always calculated on units produced then once we get cost per unit produced then it is calculated as a base line for cost of goods sold eg if cost per unit produced is 10$ then if u sell 500 units cost of sales for those 500 units would be 500*10 i.e 5000$ .
Dear Friends,
I have a question:
I want to setup Absorption costing of a product in year 2020. Next, I want to compare actual costing and Absorption costing in this product by month, year. How do I setup?.
Dear Friends, I have a question:
1/ In the absorption costing system, I think the difference between Absorbed cost and full costing. Absored cost = direct material + direct labor + variable overhead manufacturing + fixed overhead manufacturing for a product or a brand or a product line. full cost= Absored cost + all corporate-related expenses for all product or all brand or all product line. Could you help?. Thank you.
How we do closing inventory? In AC statement
Thank god for this video lol my professor can't even speak english
Hi there, I find it so confusing how you calculated the total FOH for 2021. I used the same method as you and we got the same exact answer for 2019 and 2020 but for 2021 I got 300,000 instead of 200,000. What I did was 150,000 / 5,000 = 30 x 10,000 = 300,000 which is how we solved for both previous years. I'm so confused.
I did the same thing and was also confused but then I realized... You should only be contributing that $30 MOH per unit to the 5000 sales that are yet to be inventoried in 2021. The 5000 in beginning inventory have already been cost in the previous year manufacturing cycle at 5000*10=50,000 and the current year remaining sales of 5000 would be inventoried at 30 5000*30=150,000 in the current year manufacturing cycle. Add those together 50,000+150,000=200,000 and you get 2021 MOH.
@@johnpatton1652 thank you so much!!! i was confused as well and your explanation helped me!!!
I thought the same, dividing 150k in 5k gives u 3 then that times 10k gives u 300k, the thing is that I’ve even tried different ways to see how he could’ve obtained those 150k+50k but it was impossible.
@@johnpatton1652 Amazing, thank you so much.
Thanks god bless you!! : )
I DID NOT UNDERSTAND HOW WE CALCULATED THE OPERATING PROFITTTTTTTTTTT!!!!!!!
just subtract every cost from sales revenue
How do you get 200000 from fixed MOH
PLEASE HELP ME
hi bro