Cost-volume-profit analysis favors either variable costing or absorption costs. Why?

Q: How does the variable cost per unit change as the level of activity (or cost driver) increases? Why?

A: A variable cost changes is directly proportional to the change in the level of activity or cost…

Q: When units produced are less than units sold, how does operating income differ between variable…

A: Absorption Costing: "Absorption costing is a method that allocates "direct labor, direct materials,…

Q: What is meant by an activity base when dealing with variable costs? Give several examples of…

A:

Q: Explain the difference between total variable costs and variable costs per unit.

A: Cost can be categorized as variable and fixed costs.

Q: Define and explain the contribution margin.  Include the difference in fixed and variable costs in…

A: Contribution margin may be defined as the amount of profit generated when only the cost of goods…

Q: In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost…

A: Mixed cost also called the semi variable cost . Mixed cost contains both fixed and variable cost .…

Q: Why would someone use variable costing over absorption Costing ?

A: The variable costing method is the method that only includes the variable costing whereas,…

Q: What are some factors that affect variable costs?

A: Variable costs: A variable cost is a business expenditure that varies in proportion to manufacturing…

Q: Why is there a need to separate mixed cost as to variable & fixed cost?

A: Variable cost: these are the costs which vary with the units produced. These costs increase by…

Q: cuss the advantages and disadvantages of using variable costing

A: Answer: Variable costing is the costing system that is variable as per unit produced. The advantages…

Q: Show the effects oncontribution margin of changesin variable costs, fixed costs,selling price, and…

A: Cost-Volume-Profit (CVP) Analysis: It is a method followed to analyze the relationship between the…

Q: When output volume increases, do variable costs per unit increase, decrease, or stay the same within…

A: Variable costs: These are the costs that proportionately change with the changes in the activity…

Q: Why is absorption costing the method allowable for GAAP yet managers prefer variable costing

A: In variable costing only variable costs are included in the product cost. Fixed costs re considered…

Q: Explain the difference between fixed cost and variable cost? Support your answer with examples

A: Cost:   It is the economic value of resources incurred by a firm to manufacture a product or render…

Q: Show income comparison's of absorption and variable costing?

A: Absorption costing method can be defined as the all the costs that is associated with the production…

Q: Fixed, variable, and semi-variable costs all have a distinct relationship.

A: Introduction: To put it simply, a cost is a measure of how much money is spent to produce a product…

Q: What is the similarity of fixed costs with variable costs and its differences.

A: similarities and differences of fixed cost and variable cost are discussed in step 2

Q: How lean production eliminate the difference between absorption and variable costing

A: Following is the answer to the given question

Q: What are costs that have characteristics of both a variable and fixed cost?

A: A cost that has characteristics of both a variable cost and a fixed cost is called a mixed costs or…

Q: What is the difference between absorption-costing income and variable-costing income?

A: The income statement is prepared to record the revenues and expenses of the current period.

Q: Generally speaking, net operating income under variable and absorption costing will: Multiple Choice

A: The correct option is: be equal only when production and sales are equal.   Net Operating Income =…

Q: Types of Fixed and Variable cost with the help of example and graph?

A: Costs are the total spent amount for the expenditures and for producing the goods and services.…

Q: When output volume increases, do fixed costs per unit increase, decrease, or stay the same within…

A: Fixed Costs:   These are the costs that remain constant in total dollar amount irrespective to the…

Q: PV ratio is the function of sales and variable costtherefore it can be achieved by

A: The contribution margin is computed by subtracting the variable cost from the sale revenue. The…

Q: How does Lean Production reduce or eliminate the difference in reported net operating income between…

A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…

Q: What is the primary disadvantage of basing the costplus pricing formula on absorption cost?

A: Definition: Cost plus-pricing approach: The pricing approach used by the companies to set the target…

Q: What is the correlation between fixed, variable, and semi-variable costs??

A: Introduction:- Fixed Costs – Costs are same irrespective of the number of output produced Variable…

Q: Giving examples, distinguish between Variable cost and Fixed costs

A: Introduction: Costs: Costs are of two types: 1 ) Fixed costs 2 ) variable costs

Q: What is a relationship between fixed, variable and semi-variable cost?

A: Cost can be defined as the amount incurred upon the production of goods and services for the final…

Q: Under absorption costing, how is it possible to increase net operating income without increasing…

A: Format of Income Statement under Absorption Costing

Q: Cost-volume-profit (CVP) analysis is based entirely on unit costs.” Do you agree? Explain.

A: Cost-volume-profit (CVP) analysis represents the method of cost accounting that shows the impact…

Q: Absorption costing is more compatible with cost-volume-profit analysis than is variable costing.…

A: Variable costing simply covers the variable costs actually incurred in production, but not any of…

Q: What is variable costing?

A: Variable Costing: “Variable costing is a method that allocates only variable manufacturing costs to…

Q: Compare actual and normal costing. What is the benefit of each? What is a circumstance in which each…

A: Actual Costing: Actual costing is a cost bookkeeping framework that utilizes genuine cost,…

Q: Required: When compared to variable costing income, Gem's absorption costing income is

A: Solution:- Given, Inventory for Gem's sole product totaled = 6,000 units and 5,200 units…

Q: What is a fixed cost? A variable cost? A mixed cost? Give an example of each

A: Costs are the expenses incurred in business. It means costs incurred for the manufacturing of…

Q: Explain how increasing production can increase gross profit when using absorption costing.

A: Absorption costing: Absorption costing is compulsory under Generally Accepted Accounting Principles…

Q: simple cost analysis method to identify fixed costs and variable costs in a linear cost function is…

A: High low method is method which separates the elements of fixed cost and variable cost from the…

Q: What is the difference between absorption costing and variable costing?

A:

Q: What type of cost is expertise? Is it a fixed cost or a variable cost? Defend your answer.

A: SOLUTION- FIXED COST  ARE THOSE COST WHICH DO NOT CHANGE WITH A REASONABLE LEVEL OF CHANGE .…

Q: Identify the relative advantages and disadvantages of basing transfer prices on total costs,…

A: Please find the answers to the above questions below:

Q: Differences in operating income between variable costing and absorption costing are due solely to…

A: Absorption costing: It refers to the method of product costing in which the price of the product is…

Q: Why do many managers prefer variable costing over absorption costing?

A: Variable Costing:  The variable costing is the method of costing in which only the variable…

Q: what is the definition of fixed, variable, and mixed costs? Are variable costs or fixed costs easier…

A: Introduction: Cost accounting is a type of managerial accounting that capture a firm's production…