Asked by Tiffany LaFrance on May 21, 2024
Verified
For a period during which the quantity of product manufactured equals the quantity sold, operating income reported under absorption costing will equal the operating income reported under variable costing.
Absorption Costing
An accounting method that includes all manufacturing costs (both fixed and variable) in the cost of a product.
Operating Income
Earnings from a company's core business operations, excluding expenses and revenues from investments and other non-operational activities.
Variable Costing
An accounting method that only allocates variable production costs to products, excluding fixed costs.
- Acquire an understanding of the separation between absorption costing and variable costing, along with how they influence operational income.
- Acquire knowledge on how the levels of production modulate operating income within the two costing strategies.
Verified Answer
Learning Objectives
- Acquire an understanding of the separation between absorption costing and variable costing, along with how they influence operational income.
- Acquire knowledge on how the levels of production modulate operating income within the two costing strategies.
Related questions
For a Period During Which the Quantity of Product Manufactured ...
Which of the Following Terms Is Commonly Used to Describe ...
For Short-Run Production Planning, Information in the Absorption Costing Format ...
The Total Gross Margin for the Month Under the Absorption ...
What Was the Absorption Costing Net Operating Income This Year