Question

practice: describe the variable and absorption costing methods with the reportin...
page 1:
quiz information
fill in the blanks.

1. under ______, product cost doesnt contain any fixed manufacturing

overhead cost.

1. under ______, the profit for a period is affected by a change in the number of

units of finished goods in inventory.

1. when variable costing is used, if selling prices exceed ______ and if the unit

contribution margins, the sales mix, and fixed costs remain the same, profits
move in the same direction as sales.

1. ______ is affected by the number of units produced when absorption costing

is used.

1. under absorption costing, its possible to defer a portion of the fixed

manufacturing overhead costs of the current period to future periods through
the ______ account.

1. ______ shouldnt be charged to individual segments when preparing a

segmented income statement.

1. ______ is a better measure of the long - run profitability of a segment than

contribution margin.

1. when using segmented income statements, the dollar sales for a company to

break even equal the sum of the traceable fixed expenses and the common
fixed expenses divided by the overall ______.

1. ______ costing is a costing method that treats direct labor and manufacturing

overhead costs as period costs and includes only direct materials cost in unit
product costs.

1. variable and absorption costing are alternative methods of determining

respond to the following based on your reading.

1. whats the difference between absorption costing and variable costing?

Explanation:

Variable costing includes only variable manufacturing costs in product cost. Absorption costing includes both variable and fixed manufacturing costs. For example, in variable costing, fixed manufacturing overhead is a period cost. In absorption costing, it's part of product cost. This affects inventory valuation and profit calculation. When inventory changes, absorption - costing profit is affected (due to fixed cost in inventory). Variable - costing profit depends more on sales as fixed cost is expensed in the period.

Answer:

1. variable costing
2. absorption costing
3. variable costs
4. Net operating income
5. inventory
6. Common fixed expenses
7. Segment margin
8. contribution margin ratio
9. Direct
10. product costs