Question

Match the appropriate costing method to the description

Answer 1

Answer:

• a. Absorption costing only  --  8. Includes gross profit on the income statement
• 2. Required by generally accepted accounting principles.
• b. Variable costing only  --  6. Generally provides the most useful report for setting long-term prices.
• 3. Treats fixed manufacturing cost as a period cost.
• 5. Generally provides the most useful report for controlling costs.
• 4. Operating income is impacted by changes in inventory level.
• c. Both absorption and variable costing  --  7.May be used in a manufacturing company
• 1.Treats fixed selling cost as a period cost.

Explanation:

• The absorption costing includes that all the manufacturing costs which are given to the units produced and the cost of a finished product will be the cost of the direct material and labor.

• Variable cost is a method that assigned the variables costs to the inventories and means that overall cost changes to expenses in a time of occurrence.

• Both of these costs are related to the method of the production and costs that are incurred in the production and in which method the company uses to make.