In comparing the absorption and variable cost methods, each of the following statements is true except: SG&A fixed expenses are not included in inventory in either method. Only the absorption method may be used for external financial reporting. Variable costing charges fixed overhead costs to the period they are incurred. When inventory increases over the period, variable net income will exceed absorption net income.

Q: Which of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities…

A: Whereas fixed costs remain constant, variable costs change in proportion to the volume of…

Q: Choose the best answer for each of the following multiple-choice questions.1. Cost-volume-profit…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A.…

A: Inflation and cost of goods sold - a company selling goods during periods of inflation will see an…

Q: If inventory is being valued at cost and the price level is steadily rising, which of the three…

A: Inventory can be defined as a form of asset which is held by a business firm for resale purposes.…

Q: Which of the following statements is NOT true of Economic Order Quantity? O A. The economic order…

A: EOQ: Economic Order Quantity is basically the optimal quantity of number of orders which in turn…

Q: If inventory increased during the year, income reported under absorption costing: will be higher…

A: Solution: If inventory increased during the year, income reported under absorption costing "will be…

Q: Which of the following is NOT true regarding an income statement organized according to the…

A: An income statement is a financial statement that tracks both corporate revenue and expenses over a…

Q: Identify the inventory costing method (SI, FIFO, LIFO, or WA) best described by each of the…

A: Each inventory valuation methods possesses its own uniqueness that will affect the financial…

Q: Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule…

A: The rule of valuing the inventory at cost or net realizable value is also called as Prudence concept…

Q: First: The inventory value shown on the balance sheet is generally higher under absorption costing…

A: Under variable costing, product cost consists of only variable manufacturing costs.  Under…

Q: Effect of Cost Changes Complete the following table by indicating whether FIFO or LIFO results in…

A: FIFO is first in first out which means inventory bought first is sold first.LIFO is last in first…

Q: Which formula reconciles the difference between absorption and variable-costing income?   a. Change…

A: Net operating income under absorption costing = Net operating income under variable costing + Change…

Q: The table below lists financial statement items that may be affected by the use of either the FIFO…

A: Rising costs is the situation when the prices keeps on increasing with time.

Q: Below is the information on a project that you are evaluating for deciding on its worthiness as an…

A: The question is related sensitivity Anaysis. The details are given

Q: Which of the following is true regarding LIFO and FIFO? A) In a period of decreasing costs, LIFO…

A: First in first out is also written as FIFO and last in first out is also written as LIFO. These are…

Q: variable costing

A: What will be the difference in net earnings computed using variable costing as opposed toabsorption…

Q: Which of the following statement is not valid as it applies to inventory costing method?  A) If…

A: The correct answer is Option (d)

Q: Which one of the following statements is true? a. Under conditions of rising prices, the LIFO…

A: Step 1    Last in, first-out (LIFO) is inventory method in which the costs of the most recent…

Q: Which of the following statement is correct?   A In a variable costing income statement, sales…

A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…

Q: 1.  Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Identify the inventory costing method (SI, FIFO, LIFO, or WA) best described by each of the…

A: The relevant inventory valuation methods are listed as per the given information.

Q: When production exceeds sales, a. Ending inventory under variable costing will exceed ending…

A: Option no. (b) is correct.

Q: During periods of increasing unit costs, the LIFO inventory method resulys in lower income taxes.…

A: Under LIFO Inventory Method, Inventory the latest purchased by the organization will be used in the…

Q: Which of the following statements Is/are true?

A: Inventory valuation: Inventory valuation is a method used or followed for the calculation cost of…

Q: When reconciling variable costing and absorption costing net operating income, fixed overhead costs…

A: Solution: S1. When reconciling variable costing and absorption costing net operating income, fixed…

Q: Baxter Corporation has been using FIFO during a period ofrising costs. Explain whether you would…

A: Requirement a:   If Baxter have been using LIFO method during rising costs, the net income the…

Q: When applying lower of cost or net realizable value under the FIFO, average cost, or specific…

A: The lower of cost or net realizable value method says we should record the inventory at market price…

Q: During periods of increasing costs, the use of the FIF0 method of costing inventory will result in a…

A: First-in-First-Out (FIFO): In this method, items purchased initially are sold first. So, the value…

Q: The cost of the ending inventory under absorption costing is higher than the cost of ending…

A: The inventory which remains unsold during the accounting period is termed as ending inventory. This…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.