OBJU1CH7_05 - 5. Explain the advantages and limitations of...

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COST AND MANAGEMENT ACCOUNTING 2 UNIT 1 - CHAPTER 7: Variable Costing: A Tool for Mangement LEARNING OUTCOMES : 1. Identify the fundamental difference between variable costing and absorption costing. 2. Construct income statements using variable costing and absorption costing. 3. Reconcile differences in operating income produced by the two methods by describing how fixed overhead costs are deferred in inventory and released from inventory under absorption costing. 4. Explain the effect of changes in production on the net income reported under both variable and absorption costing and how this feature could be used to manipulate net income. What are the ethical implications of doing this?
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Unformatted text preview: 5. Explain the advantages and limitations of both the variable and absorption costing methods. 6. Explain how the use of JIT reduces the difference in net income reported under the variable and absorption costing methods. 7. Explain how the choice of denominator level can affect reported income and inventory costs under absorption costing. (Do P7-16 assuming the denominator level is 10,700 units plus supplement from Horngren text, 9-22, 9-23, 9-27, 9-28, 9-29) Demonstration and Assignment Material: E7-1, E7-2, E7-3, E7-4, E7-5, E7-6, P7-9, P7-10, P7-11, P7-12, P7-13, P7-16, P7-17. RF 06/04...
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This note was uploaded on 03/03/2012 for the course ACCT 2460 taught by Professor Farrar during the Winter '12 term at Conestoga.

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