Asked by Liang Susan on May 21, 2024
Verified
Includes gross profit on the income statement
A)Absorption costing only
B)Variable costing only
C)Both absorption and variable costing
Absorption Costing
Absorption costing is an accounting method that includes all manufacturing costs (both variable and fixed) in the cost of a product.
Variable Costing
Variable costing is an accounting method that only considers variable costs (costs that change with production levels) in the calculation of product or service costs, excluding fixed costs.
Gross Profit
The difference between sales revenue and the cost of goods sold, directly indicating the efficiency of core business activities.
- Identify the distinctions between absorption costing and variable costing techniques.
- Associate costing principles with their respective descriptions and uses.
Verified Answer
Learning Objectives
- Identify the distinctions between absorption costing and variable costing techniques.
- Associate costing principles with their respective descriptions and uses.
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