a. 1. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. a. 2. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income statement? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a number of units. Thus, the cost of goods sold is . The difference can also be explained by the amount of overhead cost included in the inventory.
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.
a. 1. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
a. 2. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income statement?
The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a number of units. Thus, the cost of goods sold is . The difference can also be explained by the amount of overhead cost included in the inventory.
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