Question:Financial AccountWhich one of the following is anadvantage of using variable costing?a. Variable costing complies with the US Internal Revenue Code.b. Variable costing complies with generally accepted accountingprinciples.c. Variable costing makes cost-volume relationships more easilyapparent.d. Variable costing is most relevant to long-run pricing strategies.

The correct answer is:c. Variable costing makes cost-volume relationships more easily apparent.…

Answered: Question:Financial Account Which one of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 7DQ: Discuss how financial data prepared on the basis of variable costing can assist management in the...

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Similar questions

How important is it to trace costs appropriately? Explain. As you are beginning to think about the importance of tracing costs appropriately, please consider the differences between variable costing and absorption costing. What implications does each of these have on such things as financial reporting of profit and pricing your products for the marketplace?
Q: What is variable costing? How does it differ from absorpotion costing? Which can better be used to manipulate the income statement and how? Why would management do this?
Firms may choose to use absorption costing or variable costing for external financial reporting purposes. True or False True False
explain why GAAP requires full absorption costing (instead of variable costing) if absorption costing can be used to deceptively manipulate financial statements
What are these equations? c.Under absorption costing, what is the cost of goods sold? d.Under variable costing, what is the cost of goods sold? e.Under absorption costing, what is the operating income? f.Under variable costing, what is the operating income? g.Reconcile the difference in operating income under absorption costing versus variable costing.
What is a good response to this post? Being that the big difference between the two margins is mostly in fixed costs, this plays a role in how each margin type is used. Gross margin is typically used for external reporting and contribution margin is often used for internal decision making. Gross Margins are helpful to compare to industry standards and is also used for overall profit analysis. When decisions are needed to be made at item specific levels, contribution margins can be more helpful. The help isolate just the variable costs for that particular product and you can model different specific changes and see how that affects the margins without taking into account fixed costs that can't be adjusted, Different industries have different needs and also very different fixed costs. Contribution management is very helpful for industries that have many types of products and need to analyze them individually, Gross margins may be more useful for companies with fewer products and less of…
Choose the letter of the correct answer: 1.) This best accounts for the difference in profit between the absorption and variable costing * a.) Difference in sales revenue b.) Difference in fixed costs incurred c.) Difference in inventory valuation d.) Difference in variable costs incurred 2.) Variable selling expenses are * a.) Product costs under variable costing but period costs under absorptions costing b.) Period costs under variable costing but product cost under absorption costing c.) Product costs under both costing methods d.) period costs under both costing methods 3. Which of the following types of cost do not appear on a variable costing income statement? * a.) Direct labor b.) Direct materials c.) Variable selling expenses d.)Fixed factory overhead per unit per sold 4.) All of the following costs are included as product costs under absorption costing except *…
Which of the following is not a potential advantage of variable costing relative to absorption costing? Net income calculated under variable costing is not closely tied to changes in sales levels. Net income calculated under variable costing is unaffected by changes in production levels. It is easier to understand the impact of fixed and variable costs on the computation of net income when variable costing is used. The use of variable costing is consistent with cost-volume-profit analysis
Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. Are these assumptions always valid?
Which format of the Income Statement is appropriate for financial reporting? O Variable costing O Activity-based O Absorption O any format is fine for financial reporting
Absorption costing is:A. a good way to value inventories for the balance sheet.B. used for external reporting purposes.C. less useful than variable costing for management decision making. D. A and B is correct E. A, B and C is correct
If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear? Question 10 options: a) Both absorption costing and variable costing. b) Absorption costing but not variable costing. c) Variable costing but not absorption costing. d) Neither variable costing nor absorption costing

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