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(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 compare: Income under variable costing and absorption costing for Company A.
(2)
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 compare: Income under variable costing and absorption costing for Company G.
(3)
Just-in-time Inventory System: It means increasing the efficiency of the inventory system by aligning the raw material required from suppliers directly to the material required in the production. This reduces the inventory costs.
To compare: Income under absorption and variable costing if ‘Just-in-time’ (JIT) inventory system is used.
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Chapter 6 Solutions
Managerial Accounting
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- Fiona Industries plans to produce 30,000 units next period at a denominator activity of 60,000 direct labor hours. The direct labor wage rate is $16.50 per hour. The company's standards allow 2.2 yards of direct materials for each unit of product; the material costs $10.50 per yard. The company's budget includes a variable manufacturing overhead cost of $3.25 per direct labor hour and fixed manufacturing overhead of $285,000 per period. Using 60,000 direct labor hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements.arrow_forwardSolve this question and accountingarrow_forwardCustom Pools currently sells420 Economy pools, 580 Standard pools, and 190 Premium pools each year. The firm is considering adding a Luxury pool and expects that, if it does, it can sell 310 of them. However, if the new pool is added, Economy pool sales are expected to decline to 290 units while Standard pool sales are expected to decline to 350. The sales of the Premium model will not be affected. Economy pools sell for an average of $16,200 each. Standard pools are priced at $24,500 and the Premium model sells for $42,000 each. The new Luxury pool will sell for $35,000. What is the value of erosion?arrow_forward
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College