Electricswitch is a division of Harclerode Products Corporation. The division manufactures and sells an electric switch used
Question:
Instructions
(a) Prepare an absorption costing income statement, with one column showing the results if 200,000 units are produced and one column showing the results if 250,000 units are produced.
(b) Prepare a variable costing income statement, with one column showing the results if 200,000 units are produced and one column showing the results if 250,000 units are produced.
(c) Reconcile the difference in net incomes under the two approaches and explain what accounts for this difference.
(d) Discuss the relative usefulness of the variable costing income statements versus the absorption costing income statements for decision making and for evaluating the managersperformance.
Step by Step Answer:
Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso