1.
Concept introduction:
Variable costing:
The method of costing where only variable costs are charged to the products is called as variable costing. The fixed
Requirement 1:
Prepare Company W’s income statement in the contribution format using variable costing.
2.
Concept introduction:
Absorption costing:
The method of costing where both fixed and variable costs are charged to the products Absorption costing absorbs the costs which are directly related to the product. The fixed overheads are charged to all units manufactured regardless of the output.
Requirement 2:
Calculate the difference between the operating income using the absorption costing method and the variable costing method.

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Chapter 4 Solutions
MANAGERIAL ACCOUNTING FOR MANGER CONNEC
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