Answered: variable costing

Business

Accounting

variable costing

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 9QE

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Question

What will be the difference in net earnings computed using variable costing as opposed to
absorption costing if the ending inventory increases with respect to the beginning inventories in
terms of units?
a. There will be no difference in net earnings.
b. Net earnings computed using variable costing will be higher.
c. The difference in net earnings cannot be determined from the information given note.
d. Net earnings computed using variable costing will be lower

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Similar questions

Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A. Cost of goods sold will be lower than under FIFO B. Gross margin will be lower than under FIFO C. Income tax expense will be lower than under FIFO D. Ending inventory will be lower than under FIFO
1. Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and total costs can be represented by straight lines. Within the relevant range of operating activity, the efficiency of operations does not change. Costs can be divided into fixed and variable components. There are changes in the inventory quantities during the period. 2. Which of the following charts plot only a profit line rather than sales and cost lines? Cost-volume-profit chart Profit-volume chart Profit-cost chart Cost-volume chart
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When inventories are decreasing, _________ costing will lead to lower profits because ______________: a. Variable; overheads are expensed to profits during the year b. Variable; overheads are retained in inventory values c. None of the available options is correct d. Absorption; capitalised overheads are retained in inventory values e. Absorption; capitalised overheads are released to profit during the year
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