Skip to main content

Business Accounting MANAGERIAL ACCOUNTING FUND. W/CONNECT

Absorption Costing: In absorption costing all the costs of production are absorbed by or assigned to all the units of production. In simple words, all the direct costs or overheads costs incurred while manufacturing the products whether variable or fixed will be included in the final product cost. Variable Costing: Variable costing is also known as marginal costing as it is dynamic in nature, i.e., cost of manufacturing changes proportionally with the change in the units of production. Variable costing does not consider fixed costs; it only acknowledges variable costs which have a direct association with production. Difference between Absorption Costing and Variable Costing: Absorption costing undertakes all costs which are incurred during production whether variable or fixed whereas variable costing considers only those variable costs which have a direct connection with production and ignores fixed costs. To identify: The correct option. Solution: Option c., fixed overhead only is the correct option. c. Fixed overheads only, is the correct answer because fixed overheads are considered only in absorption costing and not in variable costing. a. Direct materials and direct labors, is not the correct option as both of them are used in absorption as well as variable costing. b. Fixed and variable portions of overhead, is not the correct option because fixed overheads are considered only in absorption costing and not in variable costing but variable overheads are considered under both absorption and variable costing. d. Variable overheads only, is not the correct option because variable overheads are used in both absorption and variable costing. Hence, option c. is correct as fixed overheads are considered only in absorption costing and not in variable costing.

Absorption Costing: In absorption costing all the costs of production are absorbed by or assigned to all the units of production. In simple words, all the direct costs or overheads costs incurred while manufacturing the products whether variable or fixed will be included in the final product cost. Variable Costing: Variable costing is also known as marginal costing as it is dynamic in nature, i.e., cost of manufacturing changes proportionally with the change in the units of production. Variable costing does not consider fixed costs; it only acknowledges variable costs which have a direct association with production. Difference between Absorption Costing and Variable Costing: Absorption costing undertakes all costs which are incurred during production whether variable or fixed whereas variable costing considers only those variable costs which have a direct connection with production and ignores fixed costs. To identify: The correct option. Solution: Option c., fixed overhead only is the correct option. c. Fixed overheads only, is the correct answer because fixed overheads are considered only in absorption costing and not in variable costing. a. Direct materials and direct labors, is not the correct option as both of them are used in absorption as well as variable costing. b. Fixed and variable portions of overhead, is not the correct option because fixed overheads are considered only in absorption costing and not in variable costing but variable overheads are considered under both absorption and variable costing. d. Variable overheads only, is not the correct option because variable overheads are used in both absorption and variable costing. Hence, option c. is correct as fixed overheads are considered only in absorption costing and not in variable costing.

MANAGERIAL ACCOUNTING FUND. W/CONNECT

MANAGERIAL ACCOUNTING FUND. W/CONNECT

5th Edition

ISBN: 9781259688713

Author: Wild

Publisher: MCG

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 6, Problem 3MCQ

Chapter 6, Problem 5MCQ

Students have asked these similar questions

Please give me true answer this financial accounting question

Financial Accounting

Please explain the solution to this general accounting problem with accurate principles.

Chapter 6 Solutions

MANAGERIAL ACCOUNTING FUND. W/CONNECT

Ch. 6 - Prob. 1MCQ Ch. 6 - Prob. 2MCQ Ch. 6 - Prob. 3MCQ Ch. 6 - Prob. 4MCQ Ch. 6 - Prob. 5MCQ Ch. 6 - Prob. 1DQ Ch. 6 - Prob. 2DQ Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - Prob. 5DQ

Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - Prob. 10DQ Ch. 6 - Prob. 11DQ Ch. 6 - Prob. 12DQ Ch. 6 - Prob. 13DQ Ch. 6 - Prob. 14DQ Ch. 6 - Prob. 1QS Ch. 6 - Prob. 2QS Ch. 6 - Prob. 3QS Ch. 6 - Prob. 4QS Ch. 6 - Prob. 5QS Ch. 6 - Prob. 6QS Ch. 6 - Prob. 7QS Ch. 6 - Prob. 8QS Ch. 6 - Prob. 9QS Ch. 6 - Prob. 10QS Ch. 6 - Prob. 11QS Ch. 6 - Prob. 12QS Ch. 6 - Prob. 13QS Ch. 6 - Prob. 14QS Ch. 6 - Prob. 15QS Ch. 6 - Prob. 16QS Ch. 6 - Prob. 17QS Ch. 6 - Prob. 18QS Ch. 6 - Prob. 1E Ch. 6 - Prob. 2E Ch. 6 - Sims Company, a manufacturer of table computers,...Ch. 6 - Prob. 4E Ch. 6 - Prob. 5E Ch. 6 - Prob. 6E Ch. 6 - Prob. 7E Ch. 6 - Prob. 8E Ch. 6 - Prob. 9E Ch. 6 - Prob. 10E Ch. 6 - Prob. 11E Ch. 6 - Prob. 12E Ch. 6 - Prob. 13E Ch. 6 - Prob. 14E Ch. 6 - Prob. 15E Ch. 6 - A recent annual report for McDonalds reports the...Ch. 6 - Dowell Company produces a single product, its...Ch. 6 - Trez Company began operations this year. During...Ch. 6 - Prob. 3PSA Ch. 6 - Prob. 1PSB Ch. 6 - Prob. 2PSB Ch. 6 - Prob. 3PSB Ch. 6 - (This serial problem began in Chapter 1 and...Ch. 6 - Apples coding inventory amounts (in $ millions)...Ch. 6 - Prob. 2BTN Ch. 6 - Prob. 3BTN Ch. 6 - Prob. 4BTN Ch. 6 - Prob. 5BTN Ch. 6 - Prob. 6BTN Ch. 6 - Happy Family Brands, which was launched by...Ch. 6 - Prob. 8BTN Ch. 6 - Prob. 9BTN

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education

Text book image

FINANCIAL ACCOUNTING

Accounting

ISBN:9781259964947

Author:Libby

Publisher:MCG

Text book image

Accounting

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:Cengage Learning,

Text book image

Accounting Information Systems

Accounting

ISBN:9781337619202

Author:Hall, James A.

Publisher:Cengage Learning,

Text book image

Horngren's Cost Accounting: A Managerial Emphasis...

Accounting

ISBN:9780134475585

Author:Srikant M. Datar, Madhav V. Rajan

Publisher:PEARSON

Text book image

Intermediate Accounting

Accounting

ISBN:9781259722660

Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:McGraw-Hill Education

Text book image

Financial and Managerial Accounting

Accounting

ISBN:9781259726705

Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:McGraw-Hill Education

SEE MORE TEXTBOOKS