Accounting Unit One Managerial Accounting

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When the number of units produced equals the number of units sold:

under both absorption costing and variable costing , all fixed overhead incurred flows to the income statement absorption costing net income is equal to to variable costing net income

Contribution Format Income Statement

Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income

Direct costing or marginal costing are other terms for ______

Variable costing

When inventory increases, which costing method generally results in higher net income? Absorption costing Variable costing Both

Absorption Costing

Match Costing methods with the way costs are seperated -absorption -variable -1manufacturing and selling and administrative exp -2variable and fixed

absorption - 1 Absorption costing seperates product (manufacturing) costs from period (selling and administrative) costs variable -2 (Variable deducts all variable expenses from sales to determine contribution margin and all fixed expenses from contribution margin to determine income or loss)

Selling and administrative expenses

are always treated as period costs

ONLY absorption costing product costs consist of

both variable and fixed manufacturing costs


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