QUESTION 7 Choose the correct statements from the following: O Variable costing and absorption costing are the same. O For decision making, absorption costing is more suitable than variable costing. O Variable costing is based on the distinction between fixed and variable costs. O Absorption costing produces a lower product cost.

QUESTION 7 Choose the correct statements from the following: O Variable costing and absorption costing are the same. O For decision making, absorption costing is more suitable than variable costing. O Variable costing is based on the distinction between fixed and variable costs. O Absorption costing produces a lower product cost.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Product costs under variable costing are typically: Question 1 options: lower than under absorption costing higher than under absorption costing the same as with absorption costing higher than absorption costing when inventory increases
Relevant of differential cost analysis takes all variable and fixed costs into account to analyze decision alternatives considers only variable costs as they change with each decision alternative considers the change in reported net income for each alternative to arrive at the optimum decision for the company considers all variable and fixed costs as they change with each decision alternatives The term that refers to costs incurred in the past that are not relevant to a future decision is full absorption cost sunk cost incurred marginal cost under allocated indirect cost
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