How does Lean Production reduce or eliminate the difference in reported net operating income between absorption and variable costing?

Q: Operating profit is affected by changes in production under both the variable costing and absorption…

A: Operating profit is profit earned by the company from its primary or core purpose of the business.…

Q: When units produced are less than units sold, how does operating income differ between variable…

A: Absorption Costing: "Absorption costing is a method that allocates "direct labor, direct materials,…

Q: Which of the following is not a potential advantage of variable costing relative to absorption…

A: Variable costing is a method in which only variable cost is considered in product cost. Absorption…

Q: Which is more consistent with cost-volume-profit analysis, variable costing or absorption costing?…

A: Absorption Costing: "Absorption costing is a method that allocates "direct labor, direct materials,…

Q: Under variable costing, how is it possible to increase net operating income without increasing sales

A: Introduction:- Under the Variable costing includes only variable manufacturing costs such as  direct…

Q: What is the basic difference between absorption costing and variable costing?   What are the…

A: Product costs are those kinds of costs which is related to the procedure of production directly like…

Q: If the units produced exceed the units sold, which method would you expect to show the higher net…

A: Variable Costing: Variable Costing takes into account only variable manufacturing costs for…

Q: Cost-volume-profit analysis favors either variable costing or absorption costs. Why?

A: The CVP analysis is used to analyse the impact of changes in variable cost and fixed cost on net…

Q: Is variable or absorption costing a better method of computing income from operations?  Why?

A: Variable costing only covers the variable costs directly involved in production but excludes all…

Q: When units produced exceeds units sold, a. net income under absorption costing is higher than net…

A: If units produced > units sold There will be ending inventory. Some part of the fixed factory…

Q: What is the amount of the difference between the variable costing and absorption costing net…

A: Sales             3,311,000  Variable costs       Direct Materials           1,161,000…

Q: When output volume increases, do variable costs per unit increase, decrease, or stay the same within…

A: Variable costs: These are the costs that proportionately change with the changes in the activity…

Q: What is the effect of an increase in activity on total variable costs,variable cost per unit of…

A: Total cost refers to the cost or amount incurred by the company in production of its goods and…

Q: As compared with the FIFO method of costing inventories,does the LIFO method result in a larger or…

A:

Q: Why is it appropriate to use variable costing when planning production in the short term?

A: Variable Cost: The cost which is not fixed is called as variable cost. This cost is directly…

Q: Why is absorption costing the method allowable for GAAP yet managers prefer variable costing

A: In variable costing only variable costs are included in the product cost. Fixed costs re considered…

Q: If the units produced exceed unit sales, which method would you expect to show the higher…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: When units produced exceed units sold, how does operating income differ between variable costing and…

A: Absorption costing:   Absorption costing is compulsory under Generally Accepted Accounting…

Q: How lean production eliminate the difference between absorption and variable costing

A: Following is the answer to the given question

Q: Is this statement true or false? Can you please explain in detail. There is a difference between…

A: Firstly let us understand what is the theoretical production capacity is the optimum production…

Q: TRUE OR FALSE Net income under variable costing is unaffected by changes in production levels.

A: in variable costing fixed manufacturing overhead are exclude from the cost of production

Q: What could be the reason for which you can have different income figures in absorption costing and…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: What is the difference between absorption-costing income and variable-costing income?

A: The income statement is prepared to record the revenues and expenses of the current period.

Q: a. What problems are associated with using the average cost per unit as a performance measure? b.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Is there any way to show high net operating income without increasing sales under the absorption…

A: A method of costing that involves consideration of all the manufacturing costs for calculation of…

Q: decrease in variable cost

A: Break even point is the level of sales at which an entity begins to generate profit. Break even…

Q: Under absorption costing, how is it possible to increase net operating income without increasing…

A: Format of Income Statement under Absorption Costing

Q: Absorption costing is more compatible with cost-volume-profit analysis than is variable costing.…

A: Variable costing simply covers the variable costs actually incurred in production, but not any of…

Q: What is the basic difference between variable costing and absorption costing? a. Variable costing…

A: Absorption costing: Absorption costing is also called traditional costing. This method of costing…

Q: Why might it be misleading to show the fixed costs on a per unit basis?

A: Fixed Costs are those costs that do not change in aggregate in relation to the level of production…

Q: When constrained by a limiting resource, managers often seek to produce those products which have:…

A: When constrained by some budget or limited sources managers often try to make products which lie in…

Q: Which of the following statements is true? O a. Activity-based costs per unit are always greater…

A: The volume based costing represents the cost allocation to a single cost pool. The high volume…

Q: Why do product costing systems using a single, volume-based cost driver tend to overcost highvolume…

A: Costing: Costing is a technique used in cost accounting to determine the cost of a product. With…

Q: When using a variable costing system, the contribution margin discloses the excess of Revenues over…

A: Contribution  margin = Total revenue - Total variable cost

Q: Which of the following is not a potential advantage of variable costing relative absorption costing?…

A: Cost volume profit analysis is calculated by dividing the fixed cost by the unit contribution…

Q: In detail discuss what are  the advantages and disadvantages of using FIFO for process costing. In…

A: First-in First-out(FIFO) method under process costing is based on the assumption that at the…

Q: TRUE OR FALSE Net income under variable costing is closely tied to changes in sales levels.

A: Fixed cost remains same under the variable costing. No matter how much units are produced, the total…

Q: Which one of the following is correct about variable costing systems? Select one: a. Normally result…

A: Under the variable costing system, the product cost includes direct material, direct labor, direct…

Q: If the units produced and unit sales are equal, which method would you expect to show the highernet…

A: Absorption costing:   Absorption costing is compulsory under Generally Accepted Accounting…

Q: Is a variable costing income statement in service operations? If so, provide a hypothetical example…

A: Variable costing income statement deducts all the variable expenses from the revenues to get the…

Q: TRUE OR FALSE Companies that use just-in-time processing techniques will have significant…

A: A just-in-time inventory system is an inventory management system wherein the company makes the…

Q: Differences in operating income between variable costing and absorption costing are due solely to…

A: Absorption costing: It refers to the method of product costing in which the price of the product is…

Q: How does the fixed cost per unit change as the level of activity (or cost driver) increases? Why?

A: Fixed cost refers to such overheads that are not directly related to the business and which do not…

Q: What is the differential cost to produce product Zeta?

A: Given information is: Cost of producing Alpha = $23 per unit Additional cost of producing Zeta = $25…

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.