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cpakid
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Posted: 20 Jul 2010 at 22:31 \| IP Logged

This also confused me because I thought all Variable and Fixed Selling and G/A are period costs. But, on B5-36 (Becker) for the contribution approach, the Peter Olinto tells us to write to the right of "Less: Variable Costs" DM+DL+VAR OH+VAR SG&A.

So Peter Olinto is wrong?

Shouldn't contribution margin/Variable costing be:

Revenue
LESS: Variable Costs (DM+DL+VAR OH)
------------------------
CM

cpakid
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Joined: 16 Jun 2010
Location: United States
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Posted: 20 Jul 2010 at 22:39 \| IP Logged

OK, so I think I understand now. Please correct me if I am wrong.

For Contribution Margin (Inventory - B/S)

(DM+DL+VAR OH)

For Contribution Margin (Net Income - I/S)

Sales
Less: (DM+DL+VAR OH+VAR SG&A)
------
GM
Less: Fixed SG&A
------
N.I>

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