You Are Assigned to a Team Responsible for Reviewing the Financial

question 42

Essay

You are assigned to a team responsible for reviewing the financial statements with lower-level departmental managers.Some of your team members want to use the absorption costing income statement generally distributed by the accounting department.You believe a variable costing income statement will be more appropriate to use in explaining items to lower-level managers.Your team has requested more information on the variable costing format.
Required:

Write a memo to your team members explaining why you believe the variable costing income statement should be used.

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Definitions:

Temperance

Moderation or self-restraint, especially in eating and drinking.

Prohibition

The period during which the manufacture, sale, and transportation of alcoholic beverages were banned in the United States through the 18th Amendment to the Constitution (1920-1933).

Tolerance

The need for increasing levels of a drug in order to produce a constant level of effect.

Binge Drink

The consumption of an excessive amount of alcohol in a short period, typically defined as consuming five or more drinks for men, or four or more for women, within about two hours.