Managerial Accounting
Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
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Chapter 6, Problem 1AA
To determine

(1)

Absorption costing is a process that the company uses to allocate all types of costs on all products, and then calculates the final price of the products.

Variable costing considers only the variable costs and it is not used for external purpose. However, the company uses this method for their own internal management.

To discuss:

The type of costing method used by Company A to prepare their income statement.

To determine

(2)

Inventory means the goods which are available for sale during the year. At the end of the financial year, if the company has some inventory which is unsold, then it is shown on asset side of the balance sheet.

The amount inventory shown in company-A’s balance sheet for the year 2016 and 2017.

To determine

(3)

Variable costing considers only the variable costs and it is not used for external purpose. However, the company uses this method for their own internal management.

To compute:

Net income under variable costing method.

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