2023 Meet 4 Akuntansi Management : Harga Pokok Produk - Variable Costing and Full Costing

Summary

This video lecture on management accounting covers key concepts such as variable costing and full costing. The lecturer explains the differences between these two methods, including their impact on cost allocation and profitability analysis. Full costing includes all production costs, while variable costing focuses only on variable costs, with fixed costs treated as period costs. The video also highlights how these costing methods are used for decision-making, pricing strategies, and operational control. Additionally, the lecturer presents examples of how to calculate product costs and profit margins using both methods, helping viewers understand the practical applications of accounting principles.

Takeaways

• 😀 Variable costing is a method where costs change according to the volume of production, while full costing includes all production costs, both variable and fixed.
• 😀 Variable costs remain consistent per unit even when production volume changes, but total costs will fluctuate in direct proportion to the level of activity.
• 😀 Fixed costs, on the other hand, do not change with production volume, and they remain constant regardless of output changes.
• 😀 Full costing incorporates all costs related to production (both variable and fixed) in calculating the cost per unit, making it essential for determining total product costs.
• 😀 Variable costing focuses on direct costs (like raw materials and direct labor) and treats fixed overhead as a period expense, not included in the cost of goods sold.
• 😀 In full costing, fixed overhead is allocated to each unit produced, impacting the product's total cost, whether sold or in inventory.
• 😀 The primary difference between full costing and variable costing is how fixed overhead is treated: in full costing, it’s part of product cost, while in variable costing, it's an expense for the period.
• 😀 Variable costing is helpful for internal decision-making, like pricing and short-term profit planning, while full costing is more suited for external reporting and tax purposes.
• 😀 Under full costing, if production exceeds sales, overhead costs are deferred to inventory, but if sales exceed production, fixed overhead costs will increase the cost of goods sold.
• 😀 The contribution margin is a crucial concept in variable costing, highlighting the profitability of products after covering variable costs, which helps in short-term decision-making.

Q & A

What is the key difference between Variable Costing and Full Costing?

The key difference lies in how fixed costs are treated. In Full Costing, both variable and fixed costs are included in the cost of production, while in Variable Costing, only variable costs are considered part of the cost of production, with fixed costs treated as period costs.

What are variable costs and how do they behave?

Variable costs are costs that change in direct proportion to the volume of production, such as raw materials or direct labor. They remain constant on a per-unit basis but increase or decrease as the production volume changes.

What are fixed costs, and how do they behave?

Fixed costs are costs that remain constant in total regardless of the volume of production, such as rent, salaries, or insurance. These costs do not change based on how much is produced.

How does Full Costing affect profit reporting?

Full Costing includes both variable and fixed production costs in the cost of goods sold (COGS). This can affect profit reporting because fixed costs are spread across all units produced, even those not sold, which can lead to fluctuating profits depending on the volume of production and sales.

How does Variable Costing benefit internal management?

Variable Costing helps internal management by providing clear insights into how production volume impacts profit. It allows for more flexible pricing decisions and helps in short-term profit planning by focusing on contribution margin and cost control.

Why is Fixed Overhead treated differently in Full Costing and Variable Costing?

In Full Costing, Fixed Overhead is included in the cost of goods sold (COGS) and allocated to each unit produced. In Variable Costing, Fixed Overhead is considered a period cost and is expensed in the period it is incurred, not allocated to units produced.

What is the Contribution Margin and why is it important in Variable Costing?

The Contribution Margin is the difference between sales revenue and variable costs. It is crucial in Variable Costing as it helps managers determine how much revenue is available to cover fixed costs and contribute to profit, aiding in short-term decision-making.

What are the main advantages of using Variable Costing?

The main advantages of Variable Costing include easier short-term profit planning, flexible pricing, better cost control, and the ability to make more informed decisions based on the variable costs directly linked to production volume.

What are the disadvantages of Variable Costing?

The disadvantages of Variable Costing include its lack of compliance with financial accounting standards (PSAK), difficulty in classifying some costs as either fixed or variable, and that it only provides useful information for internal purposes, not external financial reporting.

What is the main impact of the method chosen on profit reporting?

The method chosen affects how fixed costs are handled in profit reporting. Under Full Costing, fixed costs are spread across all units produced and included in the unit cost, which can lead to different profit figures depending on inventory levels. Under Variable Costing, fixed costs are treated as period expenses, making profits more sensitive to sales volume.