MGA 202 1st Edition Lecture 11Outline of Last Lecture: Chapter 4-Process Costing- Similarities & Differences between Job-Order & Process Costing - Equivalent Units - Calculating Equivalent Units of Production - Compute Cost Per Equivalent UnitOutline of Current Lecture-Chapter 6*Make sure to print out extra Chapter 6 slides on UB Learns!*Exam on Saturday! 3:00-5:30 pm on South Campus Covers Chapters 1, 2, 3, 4, & 6! Reminder to see the Seating Chart on UB Learns before the exam Bring your UB ID to the exam Bring black or blue ink pen & simple calculator (NO graphing calculator) This weeks HW is still due on Friday & Quiz will be given in recitationWe’ve done….- Job Order Costing - Activity Based Costing - Process Costing - &now Variable & Absorption Costing!Variable Costing is used by real companies, about 40%.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Variable Costing- only those manufacturing costs that vary with output are treated as product costsAbsorption Costing- treats all manufacturing costs as product costs, regardless of whether they are variable or fixedVariable vs. Full Absorption Costing - In variable costing Fixed MOH is a PERIOD COST!- Whereas in absorption costing fixed MOH is a Product Cost.- Absorption “absorbs” everything & variable leaves FIXED MOH out. - When calculating cost & profits remember DM, DL, VMOH, & FMOH don’t change! These are constants.Exercise 1Which method will produce the highest values for work in process & finished goods inventories?Answer: A, absorption costingExample 2AThis is a long example, so be sure to follow along with slide #8 in your Chapter 6 slides, the handout given in class, which I will attach below, &extra slides on UB Learns mentioned above! Remember when calculating Year 2’s Absorption & Variable Cost of Goods Sold a different equation is used. The inventory has decreased from Year 1 to Year 2.Next Lecture-3/04- Finishing Chapter 6 notes- Reviewing for the Exam