the underlying differnce between absorption costing and variable costing lies in the treatment of A. prime costs B. variable manufacturing overhead c. fixed manufacturing overhead d. fixed non-manufacturing overhead e. all the above

the underlying differnce between absorption costing and variable costing lies in the treatment of A. prime costs B. variable manufacturing overhead c. fixed manufacturing overhead d. fixed non-manufacturing overhead e. all the above

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 11DQ: How does absorption costing differ from variable costing? When will absorption-costing operating...

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Question

the underlying differnce between absorption costing and variable costing lies in the treatment of

A. prime costs

B. variable manufacturing overhead

c. fixed manufacturing overhead

d. fixed non-manufacturing overhead

e. all the above

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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