1a. Does the level of production affect income under either costing method? Explain your findings. Production...

1a. Does the level of production affect income under either costing method? Explain your findings.

	Production Level	Production Level	Production Level
	100,000	90,000	80,000
Absorption	$___768,000__________	$___915,000_________	$_1,063,750_____
Variable	$___705,000___________	$___845,000________	$__985,000____

1b. What about the chart pictured?

1. What is the title for the X-axis?
1. What is the title for the Y-axis?
2. What does data range A represent?
1. What does data range B represent?
1. Why do the two data ranges cross?
1. What would be a good title for this chart?

Solutions

Expert Solution

(1a)

The level of production affects income under both the costing methods (i) Absorbing Costing method and (ii) Variable Costing method.

Explanation:

(i) For Absorbing Costing method:

When the Production Level decreases from 100,000 to 80,000, income increases from $768,000 to $1,063,750

(i) For Variable Costing method:

When the Production Level decreases from 100,000 to 80,000, income increases from $705,000 to $985,000

(1b)

The chart can be pictured by Multiple Line Graphs to represent the variation of Amount with respect to both the costing methods (i) Absorbing Costing method and (ii) Variable Costing method. as the level of production decreases from 100,000 to 80,000.

(i) the title for the X-axis: the level of production

(ii) the title for the Y-axis : Amount

(iii) data range A represent :Absorbing Costing method:

(iv): data range B represent: Variable Costing method:

(v) The two data ranges cross at a point at which the Amount for both the methods are same.

(vi) Tile of this chart: Variation of Amount with respect to both the costing methods as per variation of the level of production.

orchestra answered 1 year ago

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