Question

In: Accounting

How are absorption costing and variable costing the​ same? How are they​ different? Give one example...

How are absorption costing and variable costing the​ same? How are they​ different? Give one example on how management uses either absorption costing or variable costing to make a decision. Your answer should be in complete sentences with proper grammar and spelling. no handwriting

Solutions

Expert Solution

Absorption Costing and Variable Costing

Same:

· Variable manufacturing cost is treated as product cost

· Fixed selling and administrative cost treated as period cost

Different

· Fixed manufacturing overheads are absorbed on production basis in absorption costing (part of product cost). In Variable costing it is treated as period cost and charged to the period

· Variable selling and administrative cost is reduced from sales to arrive at Contribution margin. In Absorption costing is treated as part of period cost and charged to Income statement

ekkarill92 answered 3 hours ago
Next > < Previous

Related Solutions

how are absorption costing and variable costing the same?How are they different?
how are absorption costing and variable costing the same?How are they different?
What is variable costing and how are variable costing and absorption costing used for different purposes?...
What is variable costing and how are variable costing and absorption costing used for different purposes? Why is net income different when variable costing is used rather than absorption costing?
Absorption and variable costing:
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:Beginning inventory 0Units produced 9,000Units sold 7,000Selling price per unit $ 47Selling and administrative expenses:Variable per unit $ 4Fixed per year $ 58,000Manufacturing costs:Direct materials cost per unit $ 10Direct labor cost per unit $ 6Variable manufacturing overhead cost per unit $ 5Fixed manufacturing overhead per year $ 90,000Assume that direct labor is a variable cost.Required:a. Prepare an income statement for the year...
9. How does variable costing differ from absorption costing?
9. How does variable costing differ from absorption costing?
Absorption, variable, and throughput costing
Absorption, variable, and throughput costing EnRG Inc. produces trail mix packaged for sale in convenience stores in the Northeast section of the United States. At the beginning of April 2008, EnRG has no inventory of trail mix. Demand for the next three months is expected to remain constant at 50,000 bags per month. EnRG plans to produce to demand, 50,000 bags in April. However, many of the employees take vacation in June, so EnRG plans to produce 70,000 bags in...
QUESTION ONE: Absorption and Variable Costing: Prepare and Reconcile Variable costing Statements Audiophonics Limited manufactures and...
QUESTION ONE: Absorption and Variable Costing: Prepare and Reconcile Variable costing Statements Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer’s ear. Cost data for the product follows: Variable costs per unit:             Direct materials                                            $12             Direct labour                                                   24             Variable factory overhead                              8             Variable selling and administrative              6 Total variable costs per unit                                   $50 Fixed costs per month:             Fixed manufacturing overhead                  $240,000             Fixed selling and administrative                  180,000 Total fixed costs per month                                    $420,000 The product sells...
difference between absorption costing and variable costing
What is the difference between absorption costing and variable costing, and how can the choice between these two methods impact a company's reported profits and financial performance?
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the...
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing. Select whether the following characteristics are most often associated with absorption costing or variable costing. Required under generally accepted accounting principles (GAAP) Often used for internal use in decision making Cost of goods manufactured includes only variable manufacturing costs...
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the...
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing. Select whether the following characteristics are most often associated with absorption costing or variable costing. Required under generally accepted accounting principles (GAAP) Absorption Costing Often used for internal use in decision making Variable Costing Cost of goods manufactured includes...
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the...
Mastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing. Select whether the following characteristics are most often associated with absorption costing or variable costing. Required under generally accepted accounting principles (GAAP) Often used for internal use in decision making Cost of goods manufactured includes only variable manufacturing costs...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT