(1) Why accrual basis accounting may create the overproduction incentive in the absorption costing but not in the variable costing method?

(2) As an accountant, what are your recommendations to the executives in terms of using the two methods in the company?

Answer rating: 100% (QA)

1 Accrual basis accounting recognizes revenue and expenses when they are incurred regardless of when cash is exchanged In absorption costing fixed manufacturing overhead costs are allocated to units p... View the full answer