Essay test.docx - Essay test Name Mnh Hng Student no...

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Essay test Name: Đ M nh Hùng Student no: SB01518 1. What is the difference between absorption costing and variable costing? The basic difference between absorption costing and variable costing that they differ by how they handle fixed manufacturing overhead. absorption costing: treated as product cost. variable costing: treated as a period cost 2. If the units produced and unit sales are equal, which method would you expect to show the highernet operating income, variable costing or absorption costing? Why? If production and sales are equal, net operating should be the same under absorption and variable costing. When production equals sales, inventories do not increase or decrease and therefore under absorption costing fixed manufacturing overhead cost is not deferred in inventory or released from inventory. Exercise 1. Absorption costing and variable cost Year 1 Year 2 Variable cost 8 8 Fixed cost 300000/20000=15 300000/25000=12 Absorption cost 23 20 2. Year 1 Year 2 Sale 700,00 0 700,000
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