Absorption costing differs from marginal costing is the .a.amount of fixed costs that will be incurred.b.amount of costs assigned to individual units of products .c.kind of activities for which each can be used .d.fact that standard costs can be used with absorption costing but not with marginal costing
Question
Absorption costing differs from marginal costing is the .a.amount of fixed costs that will be incurred.b.amount of costs assigned to individual units of products .c.kind of activities for which each can be used .d.fact that standard costs can be used with absorption costing but not with marginal costing
Solution
Absorption costing and marginal costing differ primarily in the way they handle fixed and variable costs:
a. Amount of fixed costs that will be incurred: Both methods will incur the same amount of fixed costs. The difference lies in how these costs are accounted for. In absorption costing, fixed costs are spread over all units produced, while in marginal costing, fixed costs are treated as period costs and are written off against profits of the period in which they are incurred.
b. Amount of costs assigned to individual units of products: In absorption costing, both variable and fixed costs are assigned to individual units of products. In marginal costing, only variable costs are assigned to individual units. Fixed costs are treated as period costs.
c. Kind of activities for which each can be used: Both methods can be used for a variety of activities. However, absorption costing is typically used for external financial reporting because it is in compliance with GAAP, while marginal costing is often used for internal decision-making processes.
d. Fact that standard costs can be used with absorption costing but not with marginal costing: This is not necessarily true. Standard costs can be used with both absorption and marginal costing. The difference lies in how these costs are treated. In absorption costing, standard costs are used to spread fixed costs over all units produced. In marginal costing, standard costs are used to determine the variable cost per unit.
Similar Questions
What is the primary difference between marginal costing and absorption costing?Question 4Answera.Marginal costing considers both variable and fixed costs; absorption costing considers only variable costs.b.Marginal costing is used for external reporting; absorption costing is used for internal decision-making.c.Marginal costing includes fixed production overheads in product costs; absorption costing does not.d.Marginal costing treats fixed production overheads as period costs; absorption costing allocates them to inventory.
Absorption costing is also known as.a.historical costing.b.real costing .c.marginal costing.d.real costing.
Marginal costing is a technique that focuses on the:a.Calculation of total costsb.Analysis of fixed costsc.Separation of variable costs from fixed costsd.Determination of profit marginsClear my choice
Marginal cost is the change in:Question 52Select one:a.total cost resulting from a 1-unit change in a variable input.b.total cost resulting from a 1-unit change in quantity.c.total cost resulting from a 1-unit change in average cost.d.average cost resulting from a 1-unit change in quantity.
Fill in the Blank QuestionFill in the blank question.Under the (absorption,variable) costing method only variable costs are assigned to products.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.