What is the difference between absorption costing and variable costing? 2. Distinguish between product costs and period costs. 5. How is it possible, under absorption cost- ing, to increase net income by simply pro- ducing more goods? 6. What is the difference between gross mar- gin and manufacturing margin? 9. How is a contribution margin determined, and why is it important to management?  12. What is the break-even point?

Q: Which of the following statements is TRUE? O A. Variable costs per unit decrease as production…

A: Total Variable cost are the cost which changes with change in production volume . Fixed cost do not…

Q: On an income statement prepared using variable costing, to calculate contribution margin, a company…

A: The objective of the question is to understand what costs are subtracted from sales to calculate the…

Q: Is variable or absorption costing a better method of computing income from operations?  Why?

A: Variable costing only covers the variable costs directly involved in production but excludes all…

Q: Which of the following describes the behavior of the fixed cost per unit?

A: Fixed cost is the cost which is doesnt change gets effects with the change in production which means…

Q: What is characteristic of variable costs within the relevant range?   A. Decrease in total as as…

A: Variable costs within the relevant range has following characteristics :- Total variable cost…

Q: Select the correct statement concerning the below cost-volume-profit graph: Line E A O a. None O b.…

A: Margin of safety=Budgeted sales in dollars-Break even level in sales dollars

Q: When will NOI under the variable costing method show higher income than under the absorption costing

A: Net Operating Income: It is a calculation used to assess the profitability of the business.

Q: Give an example of how, under absorption costing, operating income could fall even though the unit…

A: Definition:   Absorption Costing: The absorption costing is a method used to allocate the fixed…

Q: . Which of the following is the best definition of a variable cost? A. A variable cost is one which…

A: Variable costs are the costs that vary on the basis of the level of output. They are determined per…

Q: Cost-volume-profit analysis is used to make many decisions, including product pricing and…

A: cost volume profit analysis (CVP analysis) is used to determine many factors such as 1)desired…

Q: Cost-volume-profit analysis is used for ________. analyzing the effects of changes in costs on…

A: Cost volume profit analysis is designed for profit forecasting at varying levels of sale volume and…

Q: Which of the following is a correct definition of the margin of safety? The excess of contribution…

A: Margin of safety: Margin of safety is the point at which company makes profit. In other words Margin…

Q: Define the term break-even point. What is the variable cost ratio? The contribution margin ratio?…

A: 1. Break-even point: It is a point where the total costs and the total sales of a company are said…