Differences in operating income between variable costing and absorption costing are due solely to accounting for fixed costs. Do you agree? Explain.

Q: variable

A: Performance evaluation based on income could be best achieved by using variable costing method in…

Q: explain why GAAP requires full absorption costing (instead of variable costing) if absorption…

A: Introduction:- i)Absorption costing:- Under the absorption costing, The following costs included in…

Q: Variable selling expenses are a. Product costs under variable costing but period costs under…

A: The correct answer is Option (a).

Q: Operating profit is affected by changes in production under both the variable costing and absorption…

A: Operating profit is profit earned by the company from its primary or core purpose of the business.…

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: “Companies that make no variable-cost/fixed-cost distinctions must use absorption costing, and those…

A: Variable Costing:The variable costing is a method used to allocate the fixed manufacturing overhead…

Q: Which is more consistent with cost-volume-profit analysis, variable costing or absorption costing?…

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

Q: If the units produced exceed the units sold, which method would you expect to show the higher net…

A: Variable Costing: Variable Costing takes into account only variable manufacturing costs for…

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

A: The CVP analysis is used to analyse the impact of changes in variable cost and fixed cost on net…

Q: Explain the difference between absorption costing and variable costing.   Why is absorption costing…

A: Variable costs are the costs that vary with the change in output of the company.

Q: The reason for some costs to be mixed in nature is? A. Presence of sunk cost in the cost structure.…

A: Fixed costs are those costs which do not change with change in level of activity like Rent Expense…

Q: What is the amount of the difference between the variable costing and absorption costing net…

A: Sales             3,311,000  Variable costs       Direct Materials           1,161,000…

Q: What are the factors that affect the breakeven point under (a) variable costing and (b) absorption…

A: Breakeven Point:The level of production that is required to cover the fixed costs and variable costs…

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: If the units produced exceed unit sales, which method would you expect to show the higher…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: When units produced exceed units sold, how does operating income differ between variable costing and…

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

Q: Explain why there is a difference in the operating profit and operating income under the two methods…

A: The product cost in an absorption costing method includes all variable and fixed production…

Q: Which of the following cost is not considered as period cost under marginal costing? Variable…

A: Marginal Costing: Marginal Costing is a costing technique whereby variable cost are charged to cost…

Q: TRUE OR FALSE When absorption costing is used for external reporting, variable costing can still be…

A: There are various approaches which can be prepared for reporting purpose. Two of which are variable…

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

A: Following is the answer to the given question

Q: Timing is the key in distinguishing between absorption and variable costing. Explain this statement.

A: Definition: Variable costing: It refers to the method of product costing in which the price of the…

Q: Why is it necessary to distinguish between variable and fixed costs when dealing with mixed costs

A: Introduction:- Every Business expenses are classified as either fixed or variable costs. on other…

Q: TRUE OR FALSE Net income under variable costing is unaffected by changes in production levels.

A: in variable costing fixed manufacturing overhead are exclude from the cost of production

Q: Variable manufacturing overhead costs are treated as period costs under both absorption and variable…

A: Variable manufacturing overhead cost is treated as product cost under both absorption and variable…

Q: Which of the following costs has no relationship with the level of output? a) Semi-variable costs.…

A: Semi variable and variable costs has a direct relationship with the level of output. Stepped fixed…

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

A: Format of Income Statement under Absorption Costing

Q: Marginal Costing refers to product costing methods that exclude ________ from product costs a)…

A: Using marginal costing, only variable costs are included in product cost.

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: The reason for some costs to be mixed in nature is: Presence of sunk cost in the cost structure.…

A: Mixed Cost:- This cost is a combination of the fixed cost and variable cost. It means that one…

Q: What is the basic difference between variable costing and absorption costing? a. Variable costing…

A: Absorption costing: Absorption costing is also called traditional costing. This method of costing…

Q: Assuming that direct labor is a variable cost, the primary difference between the absorption and…

A: Major difference between absorption and variable costing is fixed cost allocation across all units…

Q: A basic belief of variable costing is that period costs should be currently expensed. What is the…

A: A variable cost is one of the important method related to costing. Basically it is a expense of a…

Q: Which of the following option is correct regarding difference in activity-based costing when…

A: Simple costing and activity based costing does not yield in similar since the cost drivers will…

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: Which of the following is not a potential advantage of variable costing relative absorption costing?…

A: Cost volume profit analysis is calculated by dividing the fixed cost by the unit contribution…

Q: key different in accounting for costs between absorption and variable costing

A: Absorption costing and variable costing are two methods of costing products.

Q: Under variable costing, all fixed costs (including fixed product costs) are expense in the period…

A: The matching principle is the fundamental concept of accounting. It suggests that the expenses…

Q: If the units produced and unit sales are equal, which method would you expect to show the highernet…

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

Q: When units produced are less than units sold, income under absorption costing is higher than income…

A: The income statement can be prepared using various methods as variable costing and absorption…

Q: Assuming that direct labor is a variable cost, the primary difference between the absorption and…

A: Answer:   Option 3.

Q: When units produced equal units sold, how does operating income differ between variable costing and…

A: Definition: Absorption Costing: It is a method of cost accounting where all the costs are related to…

Q: How is Variable Costing and Absorption Costing differs from each other?

A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.