In: Accounting
Match the following characteristics with the appropriate costing method: (an option may be used more than one time): the options are absorption, cost object, variable, differential cost, manufacturing cost.
Prompt 1 Fixed manufacturing is treated as a period cost
Prompt 2 Easier to predict profit since it is a function of sales
Prompt 3 Also known as the full costing method
Prompt 4 Required by GAAP
Prompt 5 Also know as the direct costing method
Ans:-
Here the question is about to match the respected characteristics with appropriate costing method.
The characteristics are
A) Absorption
B) Cost Object
C) Variable
D) Differential Cost
E) Manufacturing Cost
Optios are given in the question
There for the matching are here
A) Absorption Cost - Prompt 3). Also know as full costing method
Because Absorption cost is also called as absorbed cost is a managerial costing method that account for the fixed and variable overhead cost for a particular product. That is way Absorption cost is also know as full costing method.
B) Cost Object - Prompt 4). Required by GAAP
Because the cost object is any thing for which a cost is compiled . And this approch is required under Generally Accepted Accounting Principles (GAAP).
C) Variable - Prompt 5). Also know as the direct costing method
Because variable costing is an accounting method used to allocate production costs to product being produced. So , it is called as direct costing method.
D) Differential Cost - Prompt 2). Easier to predict profit since it is a function of sales.
It enables the company to optimize its revenue.
E) Manufacturing Cost - Prompt 1). Fixed Manufacturing is treated as period cost.
Here fixed Manufacturing cost is treated as period cost and charged against income each period.