The Difference in Income Between Absorption and Variable Costing Can

question 34

Essay

The difference in income between absorption and variable costing can be explained by the change in finished-goods inventory (in units) multiplied by the standard fixed manufacturing overhead rate.
Required:
Explain why this calculation accounts for the difference noted.

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Definitions:

Subscriptions Receivable-Common Stock

An account that tracks the amount due from subscribers who have committed to purchasing a company's common stock but have not yet paid.

Common Stock Subscribed

Common stock subscribed is a term used to describe an agreement by investors to purchase common stock, a type of equity, from a company.

Polyandry

A form of marriage where a woman has more than one husband at the same time.

Matriarchy

A social system in which women hold primary power, including roles of political leadership, moral authority, social privilege, and control of property.