What exactly is absorption costing vs. variable costing?
In your opinion, describe whether you think overproducing is an ethical practice and why or why not. Include discussion of which stakeholders might react, and how they would react if they knew about this practice.
Using the following data, calculate the difference between reported income and unit costs under absorption and variable costing by answering these questions:
- How many units of production were produced? shipped? left in inventory?
- What is this firm's predetermined fixed overhead rate?
- How much of the firms fixed costs stayed in inventory under variable costing? under absorption costing?
- Calculate the unit cost using variable costing. using absorption costing.
- Based on this firm's predetermined fixed overhead rate, how much of the firms fixed costs ended up on the year's COGS and income statement under variable costing? under absorption costing?
Under which method (variable or absorption costing), will reported profits be higher? Explain why.
Budgeted and Actual fixed costs
Budgeted unit volume to be produced
Budgeted unit volume sold
Actual variable costs
Actual unit volume sold
Actual units produced
Beginning of year inventory
End of year inventory
What exactly is absorption costing vs. variable costing?© BrainMass Inc. brainmass.com August 17, 2018, 1:18 am ad1c9bdddf
This solution provides guidance in comparing absorption and variable costing in the attached Excel file for this assignment.