Explain the difference between variable costing and absorption costing income statements. Provide a hypothetical income statement in both formats in which the number of units sold is different than the number of units manufactured. Explain the contrast between the two formats.

Q: The amount of revenue required to earn a target profit is equal to Total fixed cost divided by…

A: The break even sales are the sales where business earns no profit no loss.

Q: Following GAAP, the income statement issued to in OA. be prepared in the contribution margin forma…

A: The three most important financial statements are enumerated as below:Income Statement Balance…

Q: When pricing products and using cost-plus pricing, which type of cost is perceived to be the safest…

A: In absorption costing , fixed manufacturing overhead will be included in stock valuation where as in…

Q: Which of the following is not a true statement about variable costs? O a. Total cost is known to…

A: Variable Cost Variable cost which is described as the cost which are incurred to the business entity…

Q: As compared to a traditional income statement format, which of the following terms do not appear on…

A: Where in the traditional income statement, Expenses are categorized in two different categories…

Q: What is the standard cost income statement?

A:

Q: If an income statement is prepared as an internal report, under which of the following methods would…

A: The income statement is the financial statement of the business. It tells about the profitability of…

Q: Calculation of profit change from changes in sales price, sales volume, variable costs, or fixed…

A: This question deals with profit change from changes in sales price, sales volume, variable costs, or…

Q: Select the correct statement concerning the cost-volume-profit graph at right:   At point B, profits…

A: In order to determine the Breakeven point (units), the total fixed cost is required to be divided by…

Q: Are selling and administrative expenses treated as product costs or as period costs under variable…

A: Selling and administrative expenses:   These expenses incurred by the company does not relate to the…

Q: The choice of costing method will impact both the balance sheet and the income statement. True or…

A: Different costing methods produces different results. For example, absorption costing produces…

Q: On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the…

A: Solution:- Cost-volume-profit graph is the graph which measures the loss, profit and break-even…

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: Which of the following costs change in total directly and proportionately with respect to the…

A: The objective of the question is to identify the type of cost that changes in total directly and…

Q: How are costs assigned differently using the average cost method?

A: Inventory valuation is the valuation of inventory at the time of its purchase and sale using…

Q: What are these equations? c.Under absorption costing, what is the cost of goods sold? d.Under…

A: Hey, since there are multiple subparts posted, we will answer the first three subparts. If you want…

Q: Which of the following statements regarding absorption and variable costing is correct?   A…

A: Under absorption costing, all of the direct costs and overhead costs incurred in producing a product…

Q: Which cost accounting method assumes that the cost of production is driven by the number of units…

A: Methods of costing Different industries follow different methods for ascertaining cost of their…

Q: TRUE OR FALSE When units sold exceed, units produced, income under absorption costing is higher…

A: Absorption costing is the full costing method under which all the costs related to manufacturing are…

Q: ost accounting method assumes that the cost of production is driven by the number of units produced?…

A: The basic premise of ABC Costing is that each activity within an organization consumes resources,…

Q: Based on below, Activity-Based Costing and Analysis Cost Behavior and Cost-Volume-Profit Analysis…

A: Under cost-profit volume analysis, the break-even point is that level of production where the…

Q: what would be the difference in gross margin between fifo and lifo cost flow assumptions

A: The difference in gross margin between FIFO (First-In, First-Out) and LIFO (Last-In, First-Out) cost…

Q: When using the high-low method to estimate costs, the formula “Change in Cost divided by Change in…

A: The objective of the question is to identify what cost component is estimated using the formula…

Q: 2. The following total cost graphs indicate which type of cost behavior? A. VARIABLE COST B. FIXED…

A: Cost behavior refers to how costs change as the level of activity or output changes within a…

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: Which of the following line items will not be found in the absorption costing income statement?…

A: The objective of the question is to identify which line item among the given options will not be…

Q: Operating income can be calculated by: dividing fixed costs by the contribution margin ratio.…

A: Operating income is the total amount of profit generated by a company after considering the value of…

Q: Which of the following summarizes the weighted average cost flow assumption? O Weighted average…

A: The weighted average cost flow assumption is a method of assigning costs to inventory and the cost…

Q: Cost-volume-profit analysis is used to make many decisions, including product pricing and…

A: The cost volume profit analysis is used to assess how the firm’s profit is affected if there is a…

Q: Describe income statement under variable costing.

A: Income statement: The financial statement which reports revenues and expenses from business…

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: Which type of income statements, Contribution Format or Traditional Format should be used to…

A: Contribution Format income statemnets should be used to identify relevant costs. A traditional…