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Unformatted text preview: variable manufacturing overhead i. fixed manufacturing overhead is not treated as a product cost with this method. Rather it is treated as a period cost and charge d off as an expense each period. b. Comparison of both i. Deferral of fixed manufacturing costs under absorption costing ii. Differences in inventory values iii. When production exceeds sales, Net income is higher using absorption costing iv. When sales exceed production, net income is lowering using absorption costing 6. throughput costing, and other costing a. throughput: the rate at which the manufacturing system generates money i. calculated as sales revenue minus total period costs 1. GAAP rewards managers that build inventory 2. Variable costing causes managers to focus on reducing variable costs 3. throughput costing causes managers to focus on increasing production 4....
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- Summer '08