Question: Manager: The use of absorption versus variable costing can significantly affect profitability of a company. Accountant: Not really. Before the accountant could explain the differences,

Manager: The use of absorption versus variable costing can significantly affect profitability of a company.

Accountant: Not really. Before the accountant could explain the differences, the manager instructed the accountant to prepare statements such that they project the company in the best possible way.

Required:

As the accountant of the company, how will you explain the differences between the two methods to the manager?

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The arguments in favour of the two methods are as follows Absorption Costing In comp... View full answer

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