A company has the same variable costs per unit, the same fixed costs in total and the same selling price in all four years referenced in the following table. Production and Sales Volume in Units Units Year 1 Year 2 Year 3 Year 4 Production Units6,00010,00010,00010,800 Sales Units 4,00010,50011,000 11,000 1. Using the information provided, if we used Variable Costing for all four years which year(s) would most likely have the highest Net Operating Income? Multiple Choice Years 3 and 4 would have the same Net Operating Income and it would be the highest of all four years. Year 2 Year 4 Year 3 2. Using the information provided, in what year is the Product Unit Čost using Absorption Costing the largest? Multiple Choice Year 1 Year 3 Year 4 Year 2
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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