Asked by Peyton Reyman on May 14, 2024
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Absorption costing is required for financial reporting under generally accepted accounting principles.
Absorption Costing
A method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.
Financial Reporting
The process of producing statements that disclose an organization's financial status to management, investors, and the government.
Generally Accepted Accounting Principles
The common set of accounting principles, standards, and procedures that companies use to compile their financial statements.
- Distinguish between variable costing and absorption costing, as well as their effects on profit margins.
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Learning Objectives
- Distinguish between variable costing and absorption costing, as well as their effects on profit margins.
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