Cost Accounting: A Managerial Emphasis, 15th Edition
15th Edition
ISBN: 9780133803815
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 9, Problem 9.5Q
“Companies that make no variable-cost/fixed-cost distinctions must use absorption costing, and those that do make variable-cost/fixed-cost distinctions must use variable costing.” Do you agree? Explain.
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“Companies that make no variable-cost/fixed-cost distinctions must use absorption costing, and those that do make variable-cost/fixed-cost distinctions must use variable costing.” Do you agree? Explain.
Explain the difference between absorption costing and variable costing. Why is absorption costing approved by GAAP, but variable costing is not?
Differences in operating income between variable costing and absorption costing are due solely to accounting for fixed costs. Do you agree? Explain.
Chapter 9 Solutions
Cost Accounting: A Managerial Emphasis, 15th Edition
Ch. 9 - Differences in operating income between variable...Ch. 9 - Why is the term direct costing a misnomer?Ch. 9 - Do companies in either the service sector or the...Ch. 9 - Explain the main conceptual issue under variable...Ch. 9 - Companies that make no variable-cost/fixed-cost...Ch. 9 - The main trouble with variable costing is that it...Ch. 9 - Give an example of how, under absorption costing,...Ch. 9 - What are the factors that affect the breakeven...Ch. 9 - Critics of absorption costing have increasingly...Ch. 9 - What are two ways of reducing the negative aspects...
Ch. 9 - Prob. 9.11QCh. 9 - Describe the downward demand spiral and its...Ch. 9 - Will the financial statements of a company always...Ch. 9 - Prob. 9.14QCh. 9 - The difference between practical capacity and...Ch. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Prob. 9.19ECh. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Prob. 9.23ECh. 9 - Capacity management, denominator-level capacity...Ch. 9 - Prob. 9.25ECh. 9 - Prob. 9.26ECh. 9 - Prob. 9.27ECh. 9 - Prob. 9.28PCh. 9 - Prob. 9.29PCh. 9 - Prob. 9.30PCh. 9 - Prob. 9.31PCh. 9 - Motivational considerations in denominator-level...Ch. 9 - Prob. 9.33PCh. 9 - Prob. 9.34PCh. 9 - Prob. 9.35PCh. 9 - Prob. 9.36PCh. 9 - Prob. 9.37PCh. 9 - Prob. 9.38PCh. 9 - Prob. 9.39PCh. 9 - Prob. 9.40PCh. 9 - Prob. 9.41PCh. 9 - Prob. 9.42P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Costing Method. How does the two method ( WACO - FIFO) differ?arrow_forwardPlease explain the statement below (T/F) thoroughly with examples illustrating the answer. "In activity-based costing, a product margin may exclude costs from some of the company’s activity cost pools."arrow_forwardAll the following are characteristic of relevant costs except: Multiple Choice They are generally variable. They are not committed. They are different in amount for different options. They are costs that will be incurred in the future. They are confined to inventory-related (i.e., product) costs.arrow_forward
- Which of the following statements is true? * A. The traditional approach to costing uses many different cost drivers. B. Costs that are indirect to products are by definition traceable to directly to products. C. Costs that are indirect to products are traceable to some activity. D. All of the above statements are true.arrow_forward“Sunk costs are considered by a manufacturer in decision making”. Do you agree? Explain.arrow_forwardWhat is the key different in accounting for costs between absorption and variable costing? Give a detailed example.arrow_forward
- Firms may choose to use absorption costing or variable costing for external financial reporting purposes. True or False True Falsearrow_forwardWhich of the following statements is true of ABC systems? A) ABC systems are time-driven cost systems. B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs. C) ABC systems provide valuable information to managers beyond accurate product costs. D) ABC systems assume all costs are variable costs.arrow_forwardWhy is it necessary to distinguish between variable and fixed costs when dealing with mixed costs?arrow_forward
- is this still applicable if the company uses cost model?arrow_forward'Direct costs are treated differently under the ABC method than under the traditional full costing method.' Is the above statement true or false? A. True B. Falsearrow_forwardWhich of the following statements is true? (You may select more than one answer.)a. A common cost is one type of direct cost.b. A sunk cost is usually a differential cost.c. Opportunity costs are not usually recorded in the accounts of an organization.d. A particular cost may be direct or indirect depending on the cost object.arrow_forward
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