Purchase Solution

Differences Between Variable and Absorption Costing

Not what you're looking for?

Ask Custom Question

Could please assist me answering the questions below.

What are the differences between variable and absorption costing? Why is variable costing not allowed for GAAP reporting? Which method is more useful for internal decision-making? Why? As a manager, which would you prefer? Why?

The word count needs to be 200 or 300.

Purchase this Solution
Solution Summary

This solution of 230 words differentiates between variable and absorption costing as well as explains the applicability of both in GAAP and internal decision-making. Reference used is included.

Solution Preview

Dear Student,

Thank you for using BM.
Below are my answers.

Sincerely,
Anna Liza Gaspar

ANSWERS

First, absorption costing which is also called full costing requires that the full or total costs of producing a good or service be absorbed by that good or service (Anthony, Hawkins & Merchant, 2003, p. 629). Variable costing, as the name implies, ...

Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Variable and Absorption Cost Comparison

    141845 Variable and Absorption Cost Comparison Variable and absorption costing are two cost methods. A comparison between the absorption and direct costing methods is thoroughly explained in the attached MS Word and MS Excel files.

  • the differences between absorption and variable costing

    47137 The differences between absorption and variable costing 1. What are the differences between absorption and variable costing methods on income statement presentation? 2. How are fixed costs treated under variable costing?

  • Differences between absorption and variable costing income statements.

    433171 Differences between absorption and variable costing income statements. Topple Company produces a single product.

  • Variable costing and absorption costing

    85598 What are the differences between absorption and variable costing methods on income statement presentation? What are the differences between absorption and variable costing methods on income statement presentation?

  • Calculating Product Cost Using Variable and Absorption Costing

    guidelines on calculating the product costing variable costing and absorption costing, as well as reconcile the two differences in the net income between the two methods.

  • Variable and absorption costing

    134989 Variable and absorption costing: explaining operating-income differences Variable and absorption costing, explaining operating-income differences: Nascar Motors assembles and sells motor vehicles and uses standard costing.

  • Differences between absorption and variable costing

    199910 Differences between absorption and variable costing What is the difference between absorption costing and variable costing? Any help is appreciated. Thank you for helping!

  • Absorption vs. Variable Costing

    607537 Absorption vs. Variable Costing Explain the differences between absorption costing and variable costing. Explain, with the help of an example, how a company could use a variable costing system, as well as an absorption costing system.

  • Keller Best Manufacturing: Total Contribution Margin

    Explain the differences between the traditional and the contribution margin income statements. Under (traditional absorption) costing, all normal manufacturing costs are considered product costs.

View More Related Solutions