Matakuliah
Tahun
: <<AKUNTANSI BIAYA II>>
: <<2009>>
DIRECT COSTING
Pertemuan Ke -1 dan 2
LEARNING OBJECTIVE
Distinguish between direct costing and absorption
costing.
Calculate income by direct costing and reconcile it
with absorption costing.
State the uses of direct costing
State arguments for and against direct costing
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DEFINITION
• Direct Costing also referred to as Variable Costing or
Marginal Costing, charges to products only those
manufacturing cost that vary directly with volume.
• Materials, Labor and Variable FOH are assigned to
Work In Process, Finished Goods and Cost of Goods
Sold.
• All Fixed Manufacturing Cost are treated as period
expenses.
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CONTRIBUTION MARGIN
• Contribution Margin or Marginal Income is the difference
between sales revenue all variable cost.
• C/M can be computed in total entire firm or separately for each
product line, sales territory, operation division, etc
• Example :
•
Per unit
Total
% of Sales
Sales(10,000 units) $ 70 $ 700,000
100
Less variable cost
42
420,000
60
Contribution margin 28
280,000
40
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INTERNAL USES OF DIRECT COSTING
• Direct Costing as a Profit-Planning Tool
• Direct Costing as a Guide to Product Pricing
• Direct Costing for Evaluating Profitability of Multiple
Products
• Direct Costing for Managerial Decision Making
• Direct Costing for Cost Control
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EXTERNAL USES OF DIRECT COSTING
• Separating fixed and variable cost and accounting for
each by direct costing will simplify both the understand of
the income statement and assignment of cost to
inventories.
• To keep fixed overhead out of reported product cost,
variable and fixed cost should be recorded in separate
account.
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EXTERNAL USES
• For accounting of external activity is used two accounts
for Factory Overhead : Applied FOH and FOH Control
• FOH Applied : predetermined
• FOH Control : actual
• Do adjusting to Income Statement about variance
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DIRECT VS ABSORPTION COSTING
• DIRECT COSTING :
• Including Manufacturing Cost based on this Cost
Concept are Material, Labor and Variable Factory
Overhead.
• All Product Cost are Variable Cost, include Material and
Labor, although not be mentioned as Variable Cost.
• Approach : based on cost behavior
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DIRECT VS ABSORPTION COSTING
• ABSORPTION COSTING
• Including Manufacturing Cost based on this Cost
Concept are Material, Labor, Fixed Factory Overhead
and Variable Factory Overhead.
• All Product Cost are Fixed Cost and Variable Cost
• Approach : based on classifying of cost
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INFLUENCES TO NET INCOME
• Production = Sales, so Net Income (NI) Direct Costing
(DC) = Net Income Absorption Costing (AC).
• Production > Sales, so Net Income (NI) Direct Costing
(DC) < Net Income Absorption Costing (AC).
• Production < Sales, so Net Income (NI) Direct Costing
(DC) > Net Income Absorption Costing (AC).
• Total Inventory determine differences on Net Income
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FORMAT OF INCOME STATEMENT
• Format of I/S for Direct Costing use cost behavior
concept.
• Margin Contribution will be obtained with subtracting
Sales to Variable Cost.
• Net Income will be obtained with subtracting Margin
Contribution to Fixed Cost.
• Format of Contribution (Margin)
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Format of Contribution
•
•
•
•
•
•
Format of I/S for Direct Costing
Sales ……………………………………
Variable Cost …………..………………
Margin Contribution ……………………
Fixed Cost ………………………………
Net Income (Loss) ……………………..
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xxx xxx
xxx xxx
13
• Format of I/S for Absorption Costing use base on
classifying of cost-related production cost.
• Gross Profit on Sales will be obtained with subtracting
Sales to Cost of Goods Sold.
• Net Income will be obtained with subtracting Gross
Profit to Operating Expenses.
• Format of Traditional or Conventional
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Format of Traditional or Conventional
•
•
•
•
•
•
Format of I/S for Absorption Costing
Sales ……………………………………
Cost Of Goods Sold …...………………
Gross Profit ……………………………
Operating Expenses ……….…………
Net Income (Loss) ……………………..
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xxx xxx
xxx xxx
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CONCLUSION
• Direct Costing makes I/S for Internal User with using
Format of Contribution Margin.
• Direct Costing makes I/S for External User with including
many variances to I/S.
• For External User can be used other I/S format : Format
of Traditional/Conventional, its performance is same as
direct costing with adjusting above.
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