The Table That Follows Denotes Selected Characteristics of Absorption Costing

question 9

Essay

The table that follows denotes selected characteristics of absorption costing and/or variable costing.
$\begin{array} { | l | l | l | } \hline { \text { Characteristic } } & \text { Absorption Costing } & \text { Variable Costing } \\\hline \text { Product cost: } & & \\\hline \text { Direct materials } & & \\\hline \text { Direct labour } & & \\\hline \text { Variable manufacturing overhead } & & \\\hline \text { Fixed manufacturing overhead } & & \\\hline \text { Period cost: } & & \\\hline \text { Variable selling and administrative cost } & & \\\hline \text { Fixed selling and administrative cost } & & \\\hline \text { Fixed manufacturing overhead } & & \\\hline \text { Income statement disclosure/ andience: } & & \\\hline \text { Gross margin } & & \\\hline \text { Contribution margin } & & \\\hline \text { Lower net income when inventories rise } & & \\\hline \text { External financial-statement users } & & \\\hline\end{array}$ Required:
Evaluate each product-cost, period-cost, and income-statement/disclosure characteristic and determine whether it relates to absorption costing, variable costing, or both methods. Place an "X" in the proper column.

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Definitions:

Business Termination

The process of permanently closing a business, involving the settling of debts, distribution of remaining assets, and legal formalities.

Failed Small Businesses

Enterprises that have ceased operations due to financial, operational, or market-related challenges, often serving as learning examples for future entrepreneurs.

Closing Doors

The act of permanently ceasing operations, often in the context of businesses shutting down.

Sufficient Cash

Having enough liquid assets to cover operational expenses and financial obligations.