[jeangarciarosa2]

Hi Ninjas, I have the doubt about when use variable selling expenses. I use only for the calculation of the Contribution margin. But is a period cost… 80/. For example is I calculated the product cost under direct costing,I not use variable selling cost. But, when I calculated the CM, I use the variable selling cost???

For example if the cost are:

$20 price

$2 DM

$2DL

$2 VMOH

$2 FMOH

$1 VSelling cost.

$1 Fseling administrative.

Ok the product cost is $6 in variable costing

In absorption cost the product cost is $8

The contribution margin is $13( the product cost plus VSElling expense $6+$1)

Gross profit is $12.

Please I Need yours Advices Ninjas!!!!!

[Anonymous]

You are correct, when you are determining your contribution margin variable selling expenses are a part of that figure. But when your comparing Variable to Absorption costing, the Variable selling expenses are treated the same, as a period cost. In neither case are they treated as an inventoriable cost. So the only difference between your inventoriable costs under the Variable vs. Absorption method is the treatment of Fixed Overhead (Inventoriable under Absorb. Period under Variable).

Does that make sense?

[jeangarciarosa2]

@bcjasper09 Thanks, Now is make me sense

[Author]

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