Is variable or absorption costing a better method of computing income from operations?  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: What is the effect of an increase in activity on the followingitems?a. Total variable costs.b.…

A: Cost behavior: Cost behavior is the relationship between cost and activity and it is relevant to the…

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: Marginal cost and marginal benefit analysis are important to compute efficient level of production.…

A: marginal analysis is generally the process of decision making which involve an examination of…

Q: Questions: a. What is the net income under variable costing method? b. What is the net income…

A: The question is based on the concept of Cost Accounting.

Q: TRUE OR FALSE The use of absorption costing facilitates contribution margin approach in preparing…

A: Performa of income statement under absorption costing Particulars  Amount Sales  - Less :…

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: a. What problems are associated with using the average cost per unit as a performance measure? b.…

A: Average cost per unit only rewards the manager for removing tasks or materials from the process…

Q: The objective of management, under absorption costing, is that each product recovers its full cost…

A: Absorption costing is the method used by the managers to determine the cost connected with the…

Q: Why do managers consider direct costs to be more accurate than indirect costs?

A: Cost: Cost refers to the expense incurred by the business to earn revenue from sales. In other…

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 is the effect of an increase in activity on total variable costs,variable cost per unit of…

A: Total cost refers to the cost or amount incurred by the company in production of its goods and…

Q: What are the challenges of using the incremental cost allocation method when allocating common costs…

A: Cost Allocation Method:   The cost allocation method is the method by which the costs to be assigned…

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: How do managers decide whether a cost is adirect or an indirect cost?

A: Cost refers to the amount of money incurred for acquiring a product or manufacturing a product. Cost…

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: 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: Will the profit calculated on the absorption cost basis be higher or lower than the profit…

A: The key difference in profit under marginal costing and absorption costing technique comes because…

Q: ow do I prepare an income statement based on variable co

A: In managerial accounting, variable costing is a cost concept. During the creation of a product…

Q: Which of the following is an opportunity cost? marginal cost cost of sales O lost sales cost of…

A: Introduction: Opportunity cost: Cost for the opportunity lost called Opportunity cost.

Q: What are the consequences of broad averaging on costs? Explain?

A: Broad Averaging:Broad averaging is also known as peanut butter cost is a costing approach of…

Q: When will NOI under the variable costing method show higher income than under the absorption costing

A: Net Operating Income: It is a calculation used to assess the profitability of the business.

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: Which one of the following is an example for variable cost? O a. Salary with commission O b.…

A: Variable cost is a cost that keeps on changing with the changes in the level of activity.

Q: A. What is the net income under variable costing method? B. What is the net income under absorption…

A: solution : What is the net income under variable costing method?   Units 10000 Sales…

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: a. What problems are associated with using the average cost per unit as a performance measure? b.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Is there any way to show high net operating income without increasing sales under the absorption…

A: A method of costing that involves consideration of all the manufacturing costs for calculation of…

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: Is activity-based costing always beneficial to an organization? in what situations would itb…

A: Activity based costing is a system of costing in which  allocated on the basis of activity done .it…

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

A: Format of Income Statement under Absorption Costing

Q: In a product mix decision, which is the most important factor to consider in order to try to…

A: Product mix decision includes the decision related to the adding or eliminating of the product…

Q: It is important to understand variable and fixed costs, average expenses, and the overall costs.

A: Introduction: We're only responding to the first three subparts, so if you have a question that…

Q: How should mixed costs be classified in cost, volume, and profit analysis?

A: Based on the cost behaviour costs are classified as fixed costs , variable costs and mixed costs.…

Q: In CPV analysis/ marginal costing, the term contribution is used. What does Contribution mean to…

A:

Q: Why do managers assign different costs to thesame cost objects?

A: A cost object can be defined as something to which the management feels the need to separately…

Q: 1. What is the net income under variable costing method? 2. What is the net income under absorption…

A: Variable costing means that inventory is valued at variable manufacturing cost and fixed cost is…

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: 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: TRUE OR FALSE Net income under variable costing is closely tied to changes in sales levels.

A: Fixed cost remains same under the variable costing. No matter how much units are produced, the total…

Q: Profitability changes may be simply calculated by using what kind of tool: sales…

A: The net profits are calculated as difference between sales and total 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: Is a variable costing income statement in service operations? If so, provide a hypothetical example…

A: Variable costing income statement deducts all the variable expenses from the revenues to get the…

Q: What effect does an increase in sales price have on contribution margin? An increase in fixed costs?…

A: Contribution Margin: The process or theory which is used to judge the benefit given by each unit of…