When absorption costing is used a. management may be tempted to overproduce in a given period in order to decrease net income. b. for external reporting, variable costing can still be used for internal reporting purposes. c. it facilitates cost-volume-profit analysis. d. and production exceeds sales, absorption costing reports a lower net income than variable costing.

When absorption costing is used a. management may be tempted to overproduce in a given period in order to decrease net income. b. for external reporting, variable costing can still be used for internal reporting purposes. c. it facilitates cost-volume-profit analysis. d. and production exceeds sales, absorption costing reports a lower net income than variable costing.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Management is considering a one-time-only special order. There is sufficient idle capacity to fill…

A: Introduction:- Management (or management) is the administration of a company, whether for-profit,…

Q: What is the difference between absorption costing and variable costing? 2. Distinguish between…

A: Cost accounting: It is a part of managerial accounting and is used to record total cost of…

Q: Which of the following statements is false? Multiple Choice Examples of selling costs include…

A: Costs incurred can be of three types;manufacturing,selling and,administrative.Where manufacturing…

Q: If the organization operates at an activity level outside the relevant range, any cost predictions…

A: Answer:- Relevant range meaning:- The term "relevant range" describes a particular activity level…

Q: The following data were provided by Rider, Inc, which produces a single product that it sells for…

A: Absorption costing is that costing system under which product costs includes all manufacturing costs…

Q: Which of the following is NOT true about the cause-and-effect criterion when estimating a cost…

A: The cause and effect analysis is one of the factors for making cost allocation decisions. The cost…

Q: What is variable costing? How does it differ from absorpotion costing? Which can better be used to…

A: Variable Costing is a costing method where variable expenses change in proportion with production.…

Q: On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the…

A: Solution:- Cost-volume-profit graph is the graph which measures the loss, profit and break-even…

Q: In an effort to achieve short-run profit maximization, a company that faces constraints, such as a…

A: Constraint resource is that resource which is limited in the organisation. It can be material…

Q: Cost-volume-profit analysis (CVP Analysis) requires management to classify all costs as either…

A: Cost volume profit analysis (CVP Analysis) helps the business entity in determining the impact on…

Q: 3. What are differential Revenues? A B C Any Revenue that increases when costs go down. D.…

A: Revenues and Expenses are important part of income statement. Under this, net income is calculated…

Q: he following sentences relate to achieving the financial goal of cost minimization. Which of the…

A: Cost minimization is a concept by which producers try to figure out how costs should be reduced.…

Q: Which of the following statement is false? Multiple Choice a)The contribution margin…

A: Ans. Absorption costing allocates fixed manufacturing overhead to a product whether or not it is…

Q: d in the cost of the product b) that it is not really useful for managerial decisions c) that it…

A: A cost accounting system is a system of accounting that is helpful for the internal management to…

Q: Product costs under variable costing are typically: Group of answer choices A. higher than under…

Q: For CVP analysis calculations, which of the following statements is correct? O A. In target profit…

A: The break-even sales are calculated as the fixed costs divided by the contribution margin ratio. The…

Q: Relevant of differential cost analysis takes all variable and fixed costs into account to analyze…

A: Differential cost analysis is the difference in cost for every alternative which helps in making the…

Q: How does good operating leverage magnify earnings results with modest revenue increase?

A: Operating Leverage: A cost-accounting technique called operational leverage assesses how much a…

Q: Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of…

A: Relevant cost seems to be a word used in managerial accounting to indicate avoidable expenditures…

Question

When absorption costing is used a. management may be tempted to overproduce in a given period in
order to decrease net income. b. for external reporting, variable costing can still be used for internal
reporting purposes. c. it facilitates cost-volume-profit analysis. d. and production exceeds sales,
absorption costing reports a lower net income than variable costing.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Defination

VIEW

Step 2: Explaination

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Discontinuing operations for a product or a service line

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Variable costing income will be greater than absorption costing income when: a. Sales is greater than production. b. contribution pricing is applied c. Production is less than or equal to sales. d. Production is greater than sales
Which of the following statements regarding marginal costing is incorrect? Select one: O A. It is useful long-term planning technique OB. It assumes that fixed costs remain fixed over relevant activity ranges O C. It assumes that variable costs vary in proportion to activity O D. It assumes that costs can be classified as variable or fixed
When using the general methods to estimate cost behavior, A. It is a good idea to use multiple methods so results can be compared B. Managers often apply their own best judgement as a first step in the estimation process C. Results are likely to differ from method to method D. Large differences in methods suggest that the cost cannot be estimated.
Variable costing has an advantage over absorption costing for which of the following purposes? all of the choices mentioned analysis of profitability of products, territories, and other segments of a business determining the CVP relationship among the major factors of selling price, sales mix, and sales volume minimizing the effects of inventory changes on net income
Which of the following is not a method used by managers to determine cost behavior? High-low Method Scatterplot Account analysis Regression Analysis Derivation
Describe the differences in behavior of fixed costs, variable costs, semi-variable costs and step costs. Then discuss how break-even analysis and contribution margin can be useful in making business decisions.
Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O c. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O d. Total revenues and total costs are linear in relation to output units. O e. All of the given answers are true. OUS PAGE FINISH ATTEMPT ... F1 F2 F3 F4 F5 F6 F7 F8 F10 23 % & 2 3 4 7 8. V Q W T A F K 13 C V BYNI M 24 S