Question: If inventory physically increases during the period income under absorption
If inventory physically increases during the period, income under absorption costing will be higher than income using variable costing. Explain.
Answer to relevant QuestionsA firm uses variable costing for internal reports and updates these reports daily. It must convert the variable costing results to absorption costing results for external reports. How can this conversion be accomplished? Explain how and why the use of ROI for performance evaluation can cause managers to make decisions that could be harmful to an organization in the long run.Describe agency costs and give several examples of them.Oslo Company’s industrial photo-finishing division, Rho, incurred the following costs and expenses in the last period.During the period, Rho produced 300,000 units of industrial photo prints, which were sold for $2.00 ...Ajax division of Carlyle Corporation produces electric motors, 20% of which are sold to the Bradley division of Carlyle and the remainder to outside customers. Carlyle treats its divisions as profit centers and allows ...
Post your question