Absorption Costing vs. Variable Costing
This video explains the difference between Absorption Cost and Variable Costing in the context of managerial accounting. The key functional difference between these two methods is the way in which fixed overhead is classified, and the video provides an example to illustrate how this difference leads to substantial discrepancies in the calculation of product costs, cost of goods sold, and profitability. The video then summarizes the benefits and drawbacks of Absorption Costing and Variable Costing.
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Пікірлер: 105
These videos are literally the only reason I passed my managerial accounting course. Thank you!!
@Edspira
9 жыл бұрын
Anita Chitnis Congratulations on passing your course!
@MattLeitholt
7 жыл бұрын
Dead accurate. If only we could get a degree from passing a test related to these videos for free. :D
@boitumelomokotong4861
2 жыл бұрын
8 years later, they are the reason why I my management accounting marks increased drastically 🔥👏.
The first minute of the video helped me significantly - I always wondered how the difference between variable costing and absorption costing would look in an accounting perspective, and this made it as clear as day. Much appreciated.
Your videos are still relevant nearly a decade later 🙂 Thank you!
@Edspira
2 жыл бұрын
No problem! I'm glad you found the videos useful!
Far superior to my professor.
@Edspira
8 жыл бұрын
Thank you!
@alyssacraig5276
8 жыл бұрын
+Keston Luke I second that!
genuine question: do people really enjoy this stuff? if so, how? I need to understand and emulate the mindset otherwise I'm gonna blow my brains out this semester
@muhammadairlanggarahmadi7301
4 жыл бұрын
in my opinion, what's makes me more enjoying this stuff is because it can elevate my career. I saw Starbucks with a different POV and it might help your business/job too man and that's the art of accounting
@GasaMfundo
4 жыл бұрын
Lol! Some people were created to absorb and understand this module.....other it's just to get an idea and move forward
@FullMoonHatch
3 жыл бұрын
This helps the world go round.
@TextbookBoxingGB
3 жыл бұрын
Personally I don't really enjoy learning the actual rules etc, but I find looking through accounts to work out how well a business is doing at least mildly interesting. It's worth saying that this guy makes this process as about as least painful and actually clear as it can be
@BeMyVforever
3 жыл бұрын
This question/statement will last forever LOL. I'm feeling the pain right now
All of these videos are so helpful and teach me days worth of lecture materials in such little time. I understand it so much better and easier too. Thank you so much for providing this, I just discovered your channel yesterday and it’s already made such a positive impact for me
Thanks for posting this video. Please keep up the good work and know that you are helping lots of people understand these topics.
@Edspira
7 жыл бұрын
Thank you for the kind words!
Watching your videos from the UK after you helped me so much with financial performance when I had to re-sit it. Now re-watching to help me pass my final exam which is a bit of everything! I forgot how good these are :) Thank you so much!
Thank you for these videos. They are simple and clear, it's way better than reading through my text book!!!
You sort of sound like John C. Reilly...so I'm just pretending wreck-it Ralph is teaching me accounting. It helps. Seriously, though, your videos have helped me more than I can express. Thanks for doing what you do!
@Edspira
5 жыл бұрын
Funny. I have gotten this John C. Reilly comment a few times. We are both from Chicago, so it must be the accent. Thanks for your kind words, and best of luck with your studies!
@ItsRauha
3 жыл бұрын
Its so True😂😂😂😂😊
The tone you speak, the clear voice makes me much confident of the content you teach. thank you very much for your valuable work and appreciate it very much. I have watched so many videos with same content but nothing made me sense than this. I subscribed your channel.
@Edspira
2 жыл бұрын
Thank you for such kind words. I put a lot of effort into creating the videos so it makes me very happy to hear that you are enjoying the content!
Thank you! I'm very grateful for these videos.
These Videos are the only reason why i am passing my accounting class.
You explained this much better than my teacher, my teacher argues with people when they have a question and it's as if when he's going through it again he doesn't even know what he's talking about he takes like 10 second pauses.. Smh I expect more for paying £9,000 a year
@Edspira
6 жыл бұрын
You made me smile with this one. Best of luck to you!
@benjaunceyyy
6 жыл бұрын
Thanks, my exam was yesterday and I'm happy that I felt confident in answering absorption costing method questions! But I have most probably failed as I had no idea about balance sheets. Guess I'll be re-sitting this one :/
@rubbyomariii3419
4 жыл бұрын
Same situation, I know how you feel!
studying for CPA and this helped so much! havent done managerial accounting since college and this was a perfect concise explanation. was struggling to understand differences between both methods but this helps understand better! will have to use your other videos to aid my CPA studying
@Edspira
Жыл бұрын
Glad it was helpful!
thanks from egypt, this helped me alot!
REALLY HELPFUL!
Thank u for your help me. from today I have more information about absorption costing and variable costing.
God bless you, these videos are very helpful
You guys are a great help! Thanks for helping me understand. Greetings from Holland.
@Edspira
7 жыл бұрын
no problem!
Thank you very much!
Great explaination
You are a life saver ❤️❤️ thank you ❤️❤️
Superb explanation, concise and clear!
@Edspira
6 жыл бұрын
Thanks!
Thank you!
Great video...
I learned how little i learned all semester real quick
Thank you! :)
Awesome video. Thanks!
@Edspira
6 жыл бұрын
No problem. Thanks Scott!
Hi, great video about costing methods mate!!! By the way, i would like to ask you some question. In situation when units produced > units sold, would you recommend absorption or variable-costing for evaluating management performance? And how if units produced < units sold. Thank you very much. hope u can reply asap.
i hope you can open the subtitles. + these videos r helping me a lot! thanks
@bryanquijano8850
6 ай бұрын
Hello! I also have my lecture videos for Variable Costing. Hopefully I can help you too! See link: Management Advisory Services Discussions kzread.info/head/PL-2o1HBAK0k60uT16flBEZEU8AI-hUNWI
thank you
I wish I cud have, you as my professor.Thank you so much
@Edspira
8 жыл бұрын
+Guru Prasad Thank you for the kind words!
@rubbyomari5354
4 жыл бұрын
@@Edspira I wish that too 😍 you are the best, really thank you 💟
Usufull,, thanks from Bahrain ;)
@Edspira
8 жыл бұрын
+Sayed Mohd Thank you!
thanks for your great explanation :D you sound like prof. Charles Mathews
@Edspira
7 жыл бұрын
I'm currently working on my PhD, and teach as an adjunct lecturer. I'm glad you enjoyed the video!
@nourayman5173
7 жыл бұрын
Good luck with your PhD, i know you will be a great professor :DD
Is the variable costing the same as the direct costing?
Question, in the previous video you referred to Gross margin as sales - COGS, now you refer to Net income as sales - COGS. Is Gross margin the same as Net income? thank you in advance and great video!
@Edspira
6 жыл бұрын
Gross margin is different than net income. Gross margin is sales less COGS (as you stated above). When calculating net income, you would also subtract out Selling, General, and Administrative Expenses and other misc expenses. In this example, at 4:42 I stated that we were going to ignore SG&A just to make things simpler. If you'd like to review how net income is calculated, please see this video: kzread.info/dash/bejne/X5OTxLeMdc_ZZbw.html Thanks for the question!
How did you get 43,000 Q1 and 40,000 Q2 for absorption costing? Shouldn't you add DM, DL, VOH and FOH, for this?
@jscca3536
6 жыл бұрын
you have to divide the FOH/period on the units produced before you add it to DM, DL, VOH
@cl8wnm5n
4 жыл бұрын
@@jscca3536 This
is variable costing the same as marginal costing?
Too much thanks
Dear Friends, I have a question: I want to setup Absorption costing of a product in year 2020. Next, I want to compare actual costing and Absorption costing in this product by month, year. How do I setup?.
I did not do accounting at school and my assignments are keeling me. no clue at all
How did we get the $40000 for Q2 in absorption costing , someone explain pls
Anyone notice how these balloons are selling for $80,000 each?? I'm in the wrong business..
this guy is the best lol
@Edspira
2 жыл бұрын
😀
I'm doing great in this class!
Dear Friends, I have a question: 1/ In the absorption costing system, I think the difference between Absorbed cost and full costing. Absored cost = direct material + direct labor + variable overhead manufacturing + fixed overhead manufacturing for a product or a brand or a product line. full cost= Absored cost + all corporate-related expenses for all product or all brand or all product line. Could you help?. Thank you.
@bryanquijano8850
6 ай бұрын
Hello. The difference of absorption and variable costing is how they treat the ‘fixed overhead’. In absorption costing it is a product cost but in variable costing FxOH is considered as period cost. I have KZread lecture videos on this topic. See link: Management Advisory Services Discussions kzread.info/head/PL-2o1HBAK0k60uT16flBEZEU8AI-hUNWI
COGS = beg inventory + production - end inventory, what is happening to the other 10 balloons, shouldnt they be included in the in Q2 COGS since we didnt sell them?
@cl8wnm5n
4 жыл бұрын
No because they weren’t sold. We only include the units that were sold, not necessarily produced.
Please You keep mentioning SGNA or period cost. Please can you share the link to that tutorial video if you have?
@Edspira
3 жыл бұрын
kzread.info/dash/bejne/Z4aXsLKpYcLZpLg.html
@Edspira
3 жыл бұрын
A period cost is a cost that is expensed when occurred (in contrast to a product cost, which is expensed when the inventory is sold through Cost of Goods Sold). SG&A stands for "Selling, General, and Administrative" expense; SG&A is a period cost
4 people don't like hot air balloons
I wish I had seen this much earlier, Wasted money on useless exam packs...
@Edspira
6 жыл бұрын
I've been there... they charge students a fortune for material that is often of questionable quality!
I hate accounting
@JunaidKhan-gf5yq
7 жыл бұрын
it sucks..
@sethjolitz7757
7 жыл бұрын
Raudel Gonzalez Accounting is awesome
@annavasylyeva7286
7 жыл бұрын
indeed.
@hillarinewell6671
6 жыл бұрын
Raudel Gonzalez lmao thats funny as im watching the video this is the first comment i see!!
@leaderofteam7487
6 жыл бұрын
LOL
When he says variable costing , he is referring to marginal costing ?
@huzaifa1083
4 жыл бұрын
Yes
Sir where is marginal accounting?
Is the variable costing the same as the direct costing?