One Possible Means of Determining the Difference Between Absorption and Variable

question 91

Multiple Choice

One possible means of determining the difference between absorption and variable costing based operating incomes is

• A)to add fixed manufacturing cost to the variable costing operating income.
• B)by subtracting the variable overhead rate from the fixed overhead rate and then multiplying the difference by the number of units in inventory.
• C)by subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory.
• D)by multiplying the number of units produced by the budgeted fixed manufacturing overhead rate.
• E)by adding fixed manufacturing overhead in beginning inventory to income.

Understand the key differences between absorption costing and variable costing methods.

Identify which costs are treated as product costs under variable and absorption costing.

Recognize the effects of lean production on inventories and net operating income under different costing methods.

Understand the concept of common fixed costs and their impact on product and segment reporting.

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Definitions:

Falsely High

A measurement or reading that indicates a higher value than the true value, which can occur due to technical errors or specific conditions affecting the test.

Nasogastric (NG) Tube

A flexible tube that is inserted through the nose into the stomach for feeding or medication administration.

Aspirating

The process of drawing in or out using suction, such as removing fluid or gas from the body, or accidentally inhaling food or liquids into the lungs.

Continuous Drip Feedings

A method of providing nutrients directly to the gastrointestinal tract using a steady, continuous flow, often used when a patient cannot eat by mouth.