Question

Discuss the differences between variable and absorption costing. How does variable costing help a company make good management decisions? List some examples of ways in which a business would report items that utilize variable costing models. Answer in 200 to 250 words (original answers please no copies)

Answer 1

In lost accounting both variable and Absorption 16 Used to dekimine list of production. Both are accounting Concept, under vanstable accounting if inchioles only variable manfacturing losts Such as direct metrial idirect labour and Variable manufachining overhead is units produced where as, Absorbtion hosting chichnele all looks unchieding fried costs, related to production achita Vanable losting. It is and to Calonlate per anit cost based on all lost including foed overhead lost" ben vorable losting provides for managers a better picture, because the variable hosting Sgp System Simplify the estimation of product and hushamur profitability. Various me thords of controlling losts such as Standard losting System (cs and flexible budgets here close relation with the CamScanner

vaniable losting System. So it allows to analyze data based on the achial cost of production fate for decision making . - vanable costs is related to not of products or no. of units mannfactured because average Variable loot differ widely among industntes . Rotal variable lost a Total ha Quantity of output X Variable last for anit of output 1 The business will ure variable losting methord in several ways, such as, . * To Conduct break-even analysis to determine the most number of units needed to be sold to begin earning profit. ~ Determine the contribution morgin on a product which helps to understand understand the relation between lost, volume & profit. » Facilitate decesion making excluding Finced mannfachining overhead. Scanned with CamScanner