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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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What is the difference between the unit cost of a product under absorption costing and variable costing?

To determine

Explain the difference between unit cost of a product under absorption costing and variable costing.

Explanation

Absorption Costing and Variable Costing:

The costing method which is used to calculate the cost of the product and in which all manufacturing costs are allocated to the product is called absorption costing. Calculation of product cost also includes direct material, direct labor, variable overhead and fixed overhead. Variable costing is a method in which only variable manufacturing cost is included at the time of preparing income statement.

Difference between absorption and variable costing is given below:

BasisAbsorption CostingVariab...

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