CAT / FIA FMA Syllabus E. Standard Costing - Reconcile profits under marginal - Notes 2 / 2
Main Differences
The main differences between absorption and marginal costing operating statements are
The marginal costing operating statement has a sales volume variance that is calculated using the standard contribution per unit (rather than a standard profit per unit as in absorption costing)
There is no fixed overhead volume variance
Operating Statement for the period ending …….(under Marginal Costing)
| $ | ||||
| budgeted contribution | x | |||
| sales volume variance | x | f | ||
| sales price variance | (x) | a | ||
| ---- | ||||
| cost variances | $f | $a | ||
| materials price | x | |||
| material usage | x | |||
| labour rate | x | |||
| labour idle | x | |||
| labour efficiency | x | |||
| variable overheads expenditure | x | |||
| variable overheads efficiency | x | |||
| ---- | ---- | |||
| x | x | (x) | a | |
| ---- | ||||
| actual contribution | x | |||
| fixed overheads | ||||
| budgeted fixed overheads expenditure variance | x x ---- | |||
| actual fixed overheads | (x) | |||
| ---- | ||||
| actual profit | x |
| Budgeted contribution on budgeted sales | $130,000 |
|---|---|
| Sales volume variance (F) | $20,000 |
| Budgeted contribution on actual sales | $150,000 |
| Sales price variance (A) | -$10,000 |
| All variable variances (F) | $30,000 |
| Actual contribution | ? |
Solution
= 150,000 - 10,000 - 30,000 = $170,000