Under or Over Absorption calculation

$
Absorb overheads (Actual
activity OAR)
Actual
overheds
Over or -Under
Absorb

***
(***)
***

Profit reconciliation between Absorption & Marginal

costing

$
Profit under MARGINAL
costing

***

(Closing inventory - opening

inventory) OAR per unit

***

Profit under ABSORPTION

costing

***

Income Statement (ABSORPTION Costing)

$
Sales

Sales unit selling

price

$
***

COS:
Opening inventory
Production
Closing inentory

Over absorb OVH

under absorb OVH
Gross profit
Non-production variable OVH:
selling
Distribution
Marketing

Op.Unit unit
value*
Pro.Unit unit
value
Clo.Unit unit
value

***
***
(***)
(***
)
***
(***
)
***
(***
)
(***
)
(***
)

Non-production Fixed OVH:

Selling
Marketing
Administration
Distribution

(***
)
(***
)
(***
)
(***
)

Net profit

***

Inventory value = Direct material cost + Direct labour cost +

Direct expense + variable production OVH + Fixed production
OVH

Income Statement (MARGINAL Costing)

$
Sales unit selling
price

Sales

$
***

COS:
Opening inventory
Production
Closing inentory

Op.Unit unit
value
Pro.Unit unit
value
Clo.Unit unit
value

***
***
(***)
(***)

Non-production variable OVH:

selling
Distribution
Marketing

Contribution
Fixed production OVH:
Non-production Fixed OVH:

(***)
(***)
(***)
(***)
***
(***)

Selling
Marketing
Administration
Distribution
Net profit

(***)
(***)
(***)
(***)
***

Inventory value = Direct materials + Direct labour + Direct expense +

variable production OVH