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Would you recommend variable costing or absorption costing as a source of information for managers?
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What is Absorption Costing and how is it different from Variable Costing?
Absorption Costing (also known as traditional costing approach or full costing) absorbs all costs incurred to produce goods, which can result in misleading product cost information for decision-making. In absorption costing, fixed overheads are considered as product cost. These are added in the cost of inventory and not shown as separate item (period cost) in the income statement. The full cost includes cost of direct materials, direct labor, variable manufacturing overheads and fixed overheads. The absorption costing focuses only on total cost viz. variable and fixed and it is not useful for managers to take decision, plan about future and exercise control. The cost volume profit relationship is ignored because it takes into account the total cost. Absorption costing is suitable only in those companies where equal number of units are produced and sold. However, a business operates in a dynamic environment and production and sales keep on fluctuating on a regular basis. Therefore, as absorption costing is used in such a scenario, the cost will keep on fluctuating...
What are the differences between Absorption Costing and Variable Costing?
VARIABLE COSTING VERSUS ABSORPTION COSTINGAbsorption costing applies all manufacturing overhead to production costs while they flow through Work-in-Process Inventory, Finished-Goods Inventory and expenses on the income statement while Variable Costing only applies variable manufacturing overhead.Fixed manufacturing overhead is expensed immediately as it is incurred under variable costing while it is inventoried until the accounting period during which the manufactured goods are sold under absorption costing.
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
Why does managers use a contribution margin income statement?
Managers will use this because it separates the fixed from the variable costs. It helps them make short term decisions better by not looking at long term fixed costs which can not be easily changed.
What are the limitations of absorption costing?
Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing. Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.
What are variables used to classify stars?
The first variable that is used to classify stars is its ionization state which can measure the photosphere's temperature and density. This information is gathered by splitting the light from a star with a prism and observing the resulting spectrum that includes absorption lines. Luminosity is another variable used; it is based on the width of absorption lines.
Light absorption by a pigment is measured for red blue green and yellow light what is the dependent and the independent variable?
The light absorption is dependent on the measurement of the red, blue, green and yellow light ( which is the independent variable ).
If you were a candy manufacturer which costing system should you use full absorption costing or variable costing?
full absorption costing
What two variables are used to classify stars?
The first variable that is used to classify stars is its ionization state which can measure the photosphere's temperature and density. This information is gathered by splitting the light from a star with a prism and observing the resulting spectrum that includes absorption lines. Luminosity is another variable used; it is based on the width of absorption lines.
What is Absorption Costing and how is it different from Variable Costing?
Absorption Costing (also known as traditional costing approach or full costing) absorbs all costs incurred to produce goods, which can result in misleading product cost information for decision-making. In absorption costing, fixed overheads are considered as product cost. These are added in the cost of inventory and not shown as separate item (period cost) in the income statement. The full cost includes cost of direct materials, direct labor, variable manufacturing overheads and fixed overheads. The absorption costing focuses only on total cost viz. variable and fixed and it is not useful for managers to take decision, plan about future and exercise control. The cost volume profit relationship is ignored because it takes into account the total cost. Absorption costing is suitable only in those companies where equal number of units are produced and sold. However, a business operates in a dynamic environment and production and sales keep on fluctuating on a regular basis. Therefore, as absorption costing is used in such a scenario, the cost will keep on fluctuating...
What are the differences between Absorption Costing and Variable Costing?
VARIABLE COSTING VERSUS ABSORPTION COSTINGAbsorption costing applies all manufacturing overhead to production costs while they flow through Work-in-Process Inventory, Finished-Goods Inventory and expenses on the income statement while Variable Costing only applies variable manufacturing overhead.Fixed manufacturing overhead is expensed immediately as it is incurred under variable costing while it is inventoried until the accounting period during which the manufactured goods are sold under absorption costing.
Is wavelength or absorbance the dependent variable?
"absorbance"Since in the experiment, you probably choose the wavelength, then measure the absorbance (absorption?, the absorbance is the dependent variable.
What is the dependent and independent variable when you measure the absorption of heat by color?
For dependent and independent variable, remember DRY MIX:D - dependent variableR - response you are recording in your notebookY - graphed on the Y-axisM - the thing manipulated by the scientistI - independent variableX - graphed on the X-axisSo for absorption of hear by color:the dependent variable is the absorption of heat: that's the response you are recording and when you graph it, this value goes on the Y-axis.the independent variable is the color: that's the thing you manipulated and when you graph it, this value goes on the X-axis.
What are system variable in management information system?
is quantity or item controlled by the decision maker.
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
Where can one find information on standard variable rates?
Information on standard variable rates can be located by visiting websites such as Money Facts and This is Money. Information on standard variable rates can also be obtained by visiting one's local bank and inquiring about them.
Which environment variable stores the users path to their home directory?
The HOME environment variable has this information.
