TRUE OR FALSE When absorption costing is used, management may be tempted to overproduce in each period to increase net income.
Q: variable
A: Performance evaluation based on income could be best achieved by using variable costing method in…
Q: explain why GAAP requires full absorption costing (instead of variable costing) if absorption…
A: Introduction:- i)Absorption costing:- Under the absorption costing, The following costs included in…
Q: Operating profit is affected by changes in production under both the variable costing and absorption…
A: Operating profit is profit earned by the company from its primary or core purpose of the business.…
Q: Which of the following is NOT true of variable costing? a. Profits may increase though sales…
A: Variable costing is a concept used in managerial and cost accounting in which the fixed…
Q: TRUE OR FALSE The use of absorption costing facilitates contribution margin approach in preparing…
A: Performa of income statement under absorption costing Particulars Amount Sales - Less :…
Q: Under variable costing, how is it possible to increase net operating income without increasing sales
A: Introduction:- Under the Variable costing includes only variable manufacturing costs such as direct…
Q: Managers often assume a strictly linear relationship between cost and the level of activity.How can…
A: The managers often assume the strictly linear relationship between the cost and the level of…
Q: True (t) or False (f) ______ LIFO is inappropriate where unit costs tend to decrease as production…
A: It is known as LIFO conformity rule that if a company used LIFO for tax purpose then it must also…
Q: o decide whether to accept or reject special order, the manager should ensure that the order is…
A: Solution: Special order is the order which is in addition to normal sales to customers. The…
Q: The objective of management, under absorption costing, is that each product recovers its full cost…
A: Absorption costing is the method used by the managers to determine the cost connected with the…
Q: Which of the following types of companies would be most likely to benefit from activity-based…
A: activity-based costing - generally, activity-based costing is used to allocate indirect costs or…
Q: Which of the following statements is false ? a. Volume-based costing has typically resulted in…
A: There are two methods of costing that are in place generally. One is volume based costing and other…
Q: If the units produced exceed unit sales, which method would you expect to show the higher…
A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…
Q: First: To achieve accurate costing, a high degree of correlation must exist between the cost driver…
A: Introduction:- Activity based costing allocate manufacturing overhead costs to products in a more…
Q: Explain why there is a difference in the operating profit and operating income under the two methods…
A: The product cost in an absorption costing method includes all variable and fixed production…
Q: Which one of the following is not correct about variable costing systems? Select one: O a. Focuses…
A: Variable costing: Under this method refers to the cost technique under which only variable costs are…
Q: TRUE OR FALSE When absorption costing is used for external reporting, variable costing can still be…
A: There are various approaches which can be prepared for reporting purpose. Two of which are variable…
Q: How lean production eliminate the difference between absorption and variable costing
A: Following is the answer to the given question
Q: TRUE OR FALSE Net income under variable costing is unaffected by changes in production levels.
A: in variable costing fixed manufacturing overhead are exclude from the cost of production
Q: ?Which of the following statements is false Activity-based costing typically provides less…
A: In order to solve in this question, we need to analyse the given statement one-by-one.
Q: Describe how total variable costs and unit variable costs behave with changes in the level of…
A: Since you have asked questions with multiple sub-parts, we shall be answering thefirst 3 for you.…
Q: When comparing absorption costing with variable costing, which of the following statements is not…
A: Absorption costing is that method of costing, in which all total costs (fixed and variable) are…
Q: Which TWO of the following statements about activity-based costing (ABC) are true? a. Implementation…
A: Activity-based costing suitable when: A variety of products are created Overhead accounts for a…
Q: How does Lean Production reduce or eliminate the difference in reported net operating income between…
A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…
Q: Management may be tempted to overproduce a. when using variable costing, in order to increase net…
A: Answer: Management may be tempted to overproduce Correct answer is option (c ) c. when using…
Q: What is the reason for pooling costs? O a. To shift costs from low-volume to high-volume products. O…
A: Cost mean different expenses incurred by the manufacturing concern to make a product available to…
Q: Is activity-based costing always beneficial to an organization? in what situations would itb…
A: Activity based costing is a system of costing in which allocated on the basis of activity done .it…
Q: Under absorption costing, how is it possible to increase net operating income without increasing…
A: Format of Income Statement under Absorption Costing
Q: Give an example of how, under absorption costing, operating income could fall even though the unit…
A: Definition: Absorption Costing: The absorption costing is a method used to allocate the fixed…
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: What is the basic difference between variable costing and absorption costing? a. Variable costing…
A: Absorption costing: Absorption costing is also called traditional costing. This method of costing…
Q: costs assigned to units in inventory are typically lower under absorption costing than under vanable…
A: As per the guidelines, only one question is allowed to be solved so I am answering the first…
Q: A basic belief of variable costing is that period costs should be currently expensed. What is the…
A: A variable cost is one of the important method related to costing. Basically it is a expense of a…
Q: Which of the following statements is not true regarding the use of variable and absorption costing…
A: Answer: Option d.
Q: Marginal costing is a technique that distinguishes between variable costs and fixed costs. In this…
A: Cost-volume-profit (CVP) analysis is an important and systematic method that provides useful…
Q: Which of the following is not a potential advantage of variable costing relative absorption costing?…
A: Cost volume profit analysis is calculated by dividing the fixed cost by the unit contribution…
Q: The objective of management, under absorption costing, is that each product recovers its full cost…
A: The management is interested in that product which is giving profit in return on investment.it means…
Q: In detail discuss what are the advantages and disadvantages of using FIFO for process costing. In…
A: First-in First-out(FIFO) method under process costing is based on the assumption that at the…
Q: TRUE OR FALSE Net income under variable costing is closely tied to changes in sales levels.
A: Fixed cost remains same under the variable costing. No matter how much units are produced, the total…
Q: Throughput costing • Treats all cost as period cost except for direct materials • Is very suitable…
A: Variable Costing: Variable Costing is technique of costing which does not considers the fixed cost…
Q: Which of the following statements is true? O a. Activity-based costing typically provides less…
A: Volume based costing represents the product costing where factory overhead is allocated to the…
Q: Under variable costing: a. Net operating income will always be higher than under absorption costing.…
A: Under variable costing, the inventory cost is valuate on the basis of variable manufacturing cost…
Q: Briefly discuss two methods of reducing the undesirable incentives associated with the use of…
A: Use of absorption costing can lead to undesirable incentives when evaluating the performance of a…
Q: When units produced are less than units sold, income under absorption costing is higher than income…
A: The income statement can be prepared using various methods as variable costing and absorption…
Q: Accepting a special order will improve overall net operating income if the revenue from the special…
A: Variable costs are the costs which change with change in output. Sunk costs are the costs which are…
Q: TRUE OR FALSE Companies that use just-in-time processing techniques will have significant…
A: A just-in-time inventory system is an inventory management system wherein the company makes the…
Q: Differences in operating income between variable costing and absorption costing are due solely to…
A: Absorption costing: It refers to the method of product costing in which the price of the product is…
Q: Over extended periods of time, the net income figures reported under absorption costing will be: a.…
A: Under absorption costing, unit cost is calculated on the basis of total cost including fixed and…
TRUE OR FALSE
When absorption costing is used, management may be tempted to overproduce in each period to increase net income.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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.Management may be tempted to overproducea. when using variable costing, in order to increase net income.b. when using variable costing, in order to decrease net income.c. when using absorption costing, in order to increase net income.d. when using absorption costing, in order to decrease net income.Explain how absorption costing can enable a manager to increase production solely for the purpose of inflating profit but prevents a manager from doing this if variable costing is used.
- Give an example of how, under absorption costing, operating income could fall even though the unit sales level rises.Q: What is variable costing? How does it differ from absorpotion costing? Which can better be used to manipulate the income statement and how? Why would management do this?1. Activity based costing is likely a more advantageous costing methold versus traditonal costing, to facilliate which of the following type of analysis? a) analysis of service organization cost b) analysis of channel profitablity c) analysis of long term profitablity d) analysis for reduction selling price of all products? 2. A ___ is any factor that causes a change in the cost of an activity. a) activity based cost b) cost pool c) cost driver d) standard 3. Which of the following is no a basic cost category for indirect cost? a) inventory financing cost b) Volume related cost c) Product batch cost d) activity based cost
- TRUE OR FALSE Net income under variable costing is closely tied to changes in sales levels.TRUE OR FALSE Performance evaluation based on income could be best achieved by using variable costing method in costing the products rather than absorption costing method.Under variable costing, how is it possible to increase net operating income without increasing sales?
- The objective of management, under absorption costing, is that each product recovers its full cost and leaves something towards profit as a return on investment. Explain the concept of Absorption Costing by providing a suitable numerical example.and find the profit using the same method ?Which of the following is not a potential advantage of variable costing relative absorptioncosting?a. Net income computed under variable costing is unaffected by changes productionlevels.b. It is easier to understand the impact of fixed and variable costs on computation of netincome when variable costing is used.c. The use of variable costing is consistent with cost-volume-profit analysis.d. Net income computed under variable costing is not closely tied to changes in sales level.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