Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![# Absorption Costing and Fixed Manufacturing Overhead Cost
## Instructions:
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## Questions:
**Required 1**
**Required 2**
### Query for Required 1
Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year?
**__Fixed manufacturing overhead cost included in inventory:__** [Input field]
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### Explanation:
The question is focused on determining the fixed manufacturing overhead cost incorporated into the inventory using absorption costing. Absorption costing allocates all manufacturing costs to the product, including both variable and fixed overhead costs.
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