Asked by ronak hindocha on May 19, 2024
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In an absorption costing income statement, the manufacturing margin is the excess of sales over the variable cost of goods sold.
Manufacturing Margin
The difference between the cost of manufacturing the product and the price it is sold for, indicating the profitability of production.
Variable Cost
Costs that change in proportion to the level of activity or volume of production in a company.
Absorption Costing
The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.
- Differentiate between variable costing and absorption costing and their impact on profitability.
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Learning Objectives
- Differentiate between variable costing and absorption costing and their impact on profitability.
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