Question

What types of management behavioral impacts are relevant to selecting an absorption versus a variable costing income statement for performance measurement? Why do you believe these behavioral differences exist?

Answer 1

solution:

In Variable costing costs are gathered by cost conduct. Variable costing records an organization's settled and variable expense independently regardless in the event that they are item or period costs.

For instance , costs of lease and protection stay settled regardless of number of items created while material, work shift as indicated by the units of yield

In absoprtion or Full costing costs are gathered by useful zone like expense of merchandise sold,selling costs, administartive cost, general cost or intrigue expense.Costs are classified as period or item costs.

Distinction in pay proclamation under assimilation and vaiable costing emerges in light of the fact that in ingestion costing settled assembling costs are incorporated into cost of inventories and subtracted frame income in the period in which stock is sold while in factor costing producing overheads are subtracted in period in which they are acquired.