chapter17 (variable & absorption costing)

8/10/2019 Chapter17 (Variable & Absorption Costing)

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3. +he underlying difference between absorption costing and variable costing lies in thetreatment of:A. direct labor.B. variable manufacturing overhead.

C. fixed manufacturing overhead.$. variable selling and administrative expenses.(. fixed selling and administrative expenses.

Answer: C )*: 1 +ype: C

4. %hich of the following costs would be treated differently under absorption costing andvariable costing5

$irect)abor

6ariable7anufacturing

*verhead

ixedAdministrative

(xpensesA. 8es 2o 8es

B. 8es 8es 8esC. 2o 8es 2o$. 2o 2o 8es(. 2o 2o 2o

Answer: ( )*: 1 +ype: C

9. )one tar has computed the following unit costs for the year ;ust ended:

$irect material used ixed selling and administrative cost 14

Under variable costing, each unit of the company?s inventory would be carried at:A.


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=. 'rescott Corporation has computed the following unit costs for the year ;ust ended:

$irect material used ixed manufacturing overhead /-6ariable selling and administrative cost =ixed selling and administrative cost 14

Under absorption costing, each unit of the company?s inventory would be carried at:A.


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11. $elaware has computed the following unit costs for the year ;ust ended:

6ariable manufacturing cost

6ariable selling and administrative cost 19ixed selling and administrative cost 11

%hich of the following choices correctly depicts the per!unit cost of inventory under variablecosting and absorption costing5A. 6ariable, units:

$irect materials used ,>>>$irect labor 1->,>>>6ariable manufacturing overhead 13>,>>>ixed manufacturing overhead 1>>,>>>6ariable selling and administrative costs 3>,>>>ixed selling and administrative costs =>,>>>

1-. #f #ndiana uses variable costing, the total inventoriable costs for the year would be:A. >,>>>.B. ,>>>.C. ,>>>.$. ,>>>.(. ,>>>.

Answer: C )*: 1 +ype: A

1/. +he per!unit inventoriable cost under absorption costing is:A. .

B. >.C. >.$. >.(. .>.

Answer: $ )*: 1 +ype: A

19 Hilton, Managerial Accounting, Seventh Edition


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10. Consider the following comments about absorption! and variable!costing income statements:

#.A variable!costing income statement discloses a firm?s contribution margin.##.Cost of goods sold on an absorption!costing income statement includes fixed costs.

###.+he amount of variable selling and administrative cost is the same on absorption! andvariable!costing income statements.

%hich of the above statements is are true5A. # only.B. ## only.C. # and ##.$. ## and ###.(. #, ##, and ###.

Answer: ( )*: -, / +ype: 2

1. oberts, which began business at the start of the current year, had the following data:

'lanned and actual production: 0>,>>> unitsales: /4,>>> units at


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13. 7cAfee, which began business at the start of the current year, had the following data:



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19. 2orton, which began business at the start of the current year, had the following data:



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->. +he following data relate to )obo Corporation for the year ;ust ended:

ales revenue ,>>>Cost of goods sold:

6ariable portion /4>,>>>ixed portion 11>,>>>

6ariable selling and administrative cost >,>>>ixed selling and administrative cost 4,>>>

%hich of the following statements is correct5A. )oboDs variable!costing income statement would reveal a gross margin of ,>>>.B. )oboDs variable costing income statement would reveal a contribution margin of

,>>>.C. )oboDs absorption!costing income statement would reveal a contribution margin of

,>>>.$. )oboDs absorption costing income statement would reveal a gross margin of ,>>>.

(. )oboDs absorption!costing income statement would reveal a gross margin of >>.

Answer: B )*: -, / +ype: A

Use the following to answer uestions -1!--:

ranE began business at the start of this year and had the following costs: variable manufacturing costper unit, >>@ variable selling and administrative costs per unit, >>. +he company sells its units for


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-/. #ncome reported under absorption costing and variable costing is:A. always the same.B. typically different.C. always higher under absorption costing.$. always higher under variable costing.

(. always the same or higher under absorption costing.

Answer: B )*: 0 +ype: C

-0. "omeE?s inventory increased during the year. *n the basis of this information, incomereported under absorption costing:A. will be the same as that reported under variable costing.B. will be higher than that reported under variable costing.C. will be lower than that reported under variable costing.$. will differ from that reported under variable costing, the direction of which cannot be

determined from the information given.(. will be less than that reported in the previous period.

Answer: B )*: 0 +ype: 2

-. %hich of the following conditions would cause absorption!costing net income to be lowerthan variable!costing net income5A. Units sold exceeded units produced.B. Units sold eualed units produced.C. Units sold were less than units produced.$. ales prices decreased.(. elling expenses increased.

Answer: A )*: 0 +ype: 2

-3. %hich of the following situations would cause variable!costing net income to be lower thanabsorption!costing net income5A. Units sold eualed /=,>>> and units produced eualed 0-,>>>.B. Units sold and units produced were both 0-,>>>.C. Units sold eualed ,>>> and units produced eualed 0=,>>>.$. ales prices decreased by F during the accounting period.

Answer: A )*: 0 +ype: 2

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-4. Consider the following statements about absorption! and variable!costing net income:

#.8early income reported under absorption costing will differ from income reported undervariable costing if production and sales volumes differ.

##.)ong!run, total income reported under absorption costing will often be close to that reportedunder variable costing.

###.$ifferences in income under absorption and variable costing can often be reconciled bymultiplying the change in inventory in units by the variable manufacturing overheadcost per unit.

%hich of the above statements is are true5A. # only.B. ## only.C. ### only.$. # and ##.(. ## and ###.

Answer: $ )*: 0 +ype: C

-9. %hich of the following formulas can often reconcile the difference between absorption! andvariable!costing net income5A. Change in inventory units x predetermined variable!overhead rate per unit.B. Change in inventory units G predetermined variable!overhead rate per unit.C. Change in inventory units x predetermined fixed!overhead rate per unit.$. Change in inventory units G predetermined fixed!overhead rate per unit.(. Absorption!costing net income ! variable!costing net income x fixed!overhead rate per

unit.


-=. 7onex reported >> of net income for the year by using absorption costing. +hecompany had no beginning inventory, planned and actual production of ->,>>> units, and salesof 19,>>> units. tandard variable manufacturing costs were per unit, and total budgetedfixed manufacturing overhead was >,>>>. #f there were no variances, net income undervariable costing would be:A. >>.B. >>.C. >>.$. >>.(. >>.

Answer: B )*: 0 +ype: A

2! Hilton, Managerial Accounting, Seventh Edition


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/>. Canyon reported 3,>>> of net income for the year by using variable costing. +he companyhad no beginning inventory, planned and actual production of >,>>> units, and sales of04,>>> units. tandard variable manufacturing costs were >>. #f there were no variances, net income under

absorption costing would be:A. >>.B. >>.C. 3,>>>.$. >>.(. ,>>>.

Answer: $ )*: 0 +ype: A

/1. Consider the following statements about absorption costing and variable costing:

#.6ariable costing is consistent with contribution reporting and cost!volume!profit analysis.

##.Absorption costing must be used for external financial reporting.###.A number of companies use both absorption costing and variable costing.

%hich of the above statements is are true5A. # only.B. ## only.C. ### only.$. # and ##.(. #, ##, and ###.

Answer: ( )*: , 3 +ype: C

/-. Consider the following statements about absorption costing and variable costing:

#.6ariable costing is consistent with contribution reporting and cost!volume!profit analysis.##.6ariable costing must be used for external financial reporting.###.A number of companies use both absorption costing and variable costing.

%hich of the above statements is are true5A. # only.B. ## only.C. ### only.$. # and ##.(. # and ###.

Answer: ( )*: , 3 +ype: C

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//. or external!reporting purposes, generally accepted accounting principles reuire that netincome be based on:A. absorption costing.B. variable costing.

C. direct costing.$. semivariable costing.(. activity!based costing.

Answer: A )*: 3 +ype: C

/0. Under throughput costing, the cost of a unit typically includes:A. selling costs.B. fixed manufacturing overhead.C. the direct costs incurred whenever a unit is manufactured.$. administrative costs.(. all of the above.


/. %hich of the following methods defines product cost as the unit!level cost incurred each timea unit is manufactured5A. +hroughput costing.B. #ndirect costing.C. 'rocess costing.$. Absorption costing.(. Bac&!flush costing.

Answer: A )*: 4 +ype: C

/3. *rion?s management recently committed to incurring direct labor and all manufacturingoverhead charges regardless of the number of units produced. Under throughput costing, thecompany?s cost of goods sold would include charges for:A. selling and administrative costs.B. direct materials.C. direct labor and manufacturing overhead.$. direct materials, direct labor, and manufacturing overhead.(. direct materials, direct labor, manufacturing overhead, and selling and administrative

costs.

Answer: B )*: 9 +ype: 2



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/4. Highline Company reported the following costs for the year ;ust ended:

+hroughput manufacturing costs ,>>>2on!throughput manufacturing costs 3>>,>>>

elling and administrative costs 1-,>>>

#f Highline uses throughput costing and had sales revenues for the period of ,>>>, whichof the following choices correctly depicts the company?s cost of goods sold and net income5

Cost of"oods old

2et#ncome

A. ,>>> >>B. ,>>> >>C. ,>>> >>$. ,>>> >>(. ome other combination of figures not listed above.

Answer: A )*: 9 +ype: A

/9. +he fixed!overhead volume variance under variable costing:A. coincides with the fixed manufacturing overhead that was applied to production.B. is deducted on the income statement.C. does not exist.$. will eual the fixed!overhead budget variance.(. must be unfavorable.

Answer: C )*: = +ype: C

/=. %hich of the following differs between absorption costing and variable costing5

A. +he number of units produced.B. +he fixed!overhead volume variance.C. ales revenues.$. +he treatment of variable manufacturing overhead.(. #ncome tax rates.

Answer: B )*: = +ype: C

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EXERCISES

Characteristics of Absorption Costing an !ariab"e Costing

0>. Consider the statements that follow.

1. 6ariable selling costs are expensed when incurred.-. +he income statement discloses a companyDs contribution margin./. ixed manufacturing overhead is attached to each unit produced.0. $irect labor becomes part of a unitDs cost.. ales revenue minus cost of goods sold euals contribution margin.3. +his method must be used for external financial reporting.4. ixed selling and administrative expenses are treated in the same manner as fixed

manufacturing overhead.9. +his method is sometimes called full costing.=. +his method reuires the calculation of a fixed manufacturing cost per unit.

euired:$etermine which of the nine statements:A. elate only to absorption costing.B. elate only to variable costing.C. elate to both absorption costing and variable costing.$. elate to neither absorption costing nor variable costing.

)*: 1, -, /, 3 +ype: C, 2

Answer:A. /, 3, 9, =

B. -, 4C. 1, 0$.



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Misce""aneo#s Ca"c#"ations$ !ariab"e an Absorption Costing

01. #nformation ta&en from "rille Corporation?s 7ay accounting records follows.

$irect materials used ,>>>$irect labor 9>,>>>6ariable manufacturing overhead />,>>>ixed manufacturing overhead 1>>,>>>6ariable selling and administrative costs 1,>>>ixed selling and administrative costs 3>,>>>ales revenues 3-,>>>

euired:A. Assuming the use of variable costing, compute the inventoriable costs for the month.B. Compute the month?s inventoriable costs by using absorption costing.C. Assume that anticipated and actual production totaled ->,>>> units, and that 19,>>> units

were sold during 7ay. $etermine the amount of fixed manufacturing overhead and fixedselling and administrative costs that would be expensed for the month under 1 variablecosting and - absorption costing.

$. Assume the same data as in reuirement C. Compute the contribution margin thatwould be reported on a variable!costing income statement.

)*: 1, -, / +ype: A

Answer:A. $irect materials used ,>>>

$irect labor 9>,>>>6ariable manufacturing overhead />,>>>

+otal ,>>>

B. $irect materials used ,>>>$irect labor 9>,>>>6ariable manufacturing overhead />,>>>ixed manufacturing overhead 1>>,>>>+otal ,>>>

C. 1. ixed manufacturing overhead: >,>>>ixed selling and administrative costs: ,>>>

-. ixed manufacturing overhead: >,>>> G ->,>>> units x 19,>>> units I ,>>>

ixed selling and administrative costs: ,>>>

$. 6ariable manufacturing costs: ,>>> J ,>>> J ,>>> I ,>>>6ariable manufacturing costs per unit: ,>>> G ->,>>> units I > ! K19,>>> x >L I ,>>>

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Misce""aneo#s Ca"c#"ations$ !ariab"e an Absorption Costing

0-. osa, #nc., began operations at the start of the current year, having a production target of3>,>>> units. Actual production totaled 3>,>>> units, and the company sold =>F of its

manufacturing output at ,>>>$irect labor 0->,>>>6ariable manufacturing overhead /3>,>>>ixed manufacturing overhead 3>>,>>>

elling and administrative:6ariable 1->,>>>ixed 3/>,>>>

euired:

A. Assuming the use of variable costing, compute the cost of osa?s ending finished!goodsinventory.

B. Compute the company?s contribution margin. %ould osa disclose the contributionmargin on a variable!costing income statement or an absorption!costing incomestatement5

C. Assuming the use of absorption costing, how much fixed selling and administrative costwould osa include in the ending finished!goods inventory5

$. Compute the company?s gross margin.

)*: 1, -, / +ype: C, A

Answer:

A. 6ariable production costs total 9>,>>> >,>>> J ,>>> J ,>>>, or ,>>> G 3>,>>> units. ince 3,>>> units remain in inventory K> J 3>,>>>! 3>,>>> x =>FL, the ending finished goods totals 9,>>> 3,>>> x ,>>> units x =>F x >>)ess: 6ariable cost of goods sold

3>,>>> units x =>F x >6ariable selling and administrative 1->,>>> 1,>=-,>>>

Contribution margin >>

+he contribution margin is disclosed on a variable!costing income statement.

C. 2one. All fixed selling and administrative cost is treated as a period cost and expensedagainst revenue.

$. +he cost of a unit would increase by >,>>> G 3>,>>> units because of theaddition of fixed manufacturing overhead. +hus:

ales revenue ,>>>Cost of goods sold 3>,>>> units x =>F x >>"ross margin >>



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Absorption% an !ariab"e%Costing Inco&e Ca"c#"ations

0/. +he following data relate to 6enture Company, a new corporation, during a period when the

firm produced and sold 1>>,>>> units and =>,>>> units, respectively:

$irect materials used >,>>>$irect labor ->>,>>>ixed manufacturing overhead ->,>>>6ariable manufacturing overhead 1->,>>>ixed selling and administrative expenses />>,>>>6ariable selling and administrative expenses 0,>>>

+he company met its original planned production target of 1>>,>>> units. +here were novariances during the period, and the firm?s selling price is J 1>>,>>> ! =>,>>> I 1>,>>>

#nventoriable costs under variable costing:

$irect materials used >,>>>$irect labor ->>,>>>6ariable manufacturing overhead 1->,>>>+otal ,>>>

6ariable cost per unit produced: ,>>> G 1>>,>>> units I per unit(nding inventory: 1>,>>> units x I >>

B. ales revenue =>,>>> units x >>)ess: 6ariable costs K=>,>>> units x J >>L 3=/,>>>Contribution margin < 34,>>>)ess: ixed costs ,>>> J >,>>> >,>>>

2et income < 1>4,>>>

C. 'redetermined fixed overhead rate: ,>>> G 1>>,>>> units I Absorption cost per unit: J I

ales revenue =>,>>> units x >>)ess: Cost of goods sold =>,>>> units x 94/,>>>"ross margin < 044,>>>)ess: *perating costs >,>>> J >> /0,>>>

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2et income < 1/-,>>>



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Absorption% an !ariab"e%Costing In'entor()Inco&e Ca"c#"ations

00. +he following data relate to Hunter, #nc., a new company:

'lanned and actual production ->>,>>> units

ales at ,>>> units7anufacturing costs:

6ariable >>

elling and administrative costs:6ariable >

+here were no variances during the period.

euired:A. $etermine the number of units in the ending finished!goods inventory.

B. Calculate the cost of the ending finished!goods inventory under 1 variable costing and- absorption costing.

C. $etermine the company?s variable!costing net income.$. $etermine the company?s absorption!costing net income.

)*: 1, -, / +ype: A

Answer:A. (nding finished!goods inventory: > J ->>,>>> ! 14>,>>> I />,>>> units

B. 6ariable costing: />,>>> units x >>Absorption costing:

'redetermined fixed overhead rate: ,>>> G ->>,>>> units I @/>,>>> units x > J I >>

C. ales revenue 14>,>>> units x >>)ess: 6ariable costs K14>,>>> units x >>Contribution margin ,>>>)ess: ixed costs ,>>> J >> 1,43,>>>2et income >>

$. ales revenue 14>,>>> units x >>)ess: Cost of goods sold K14>,>>> units x > J L /,440,>>>"ross margin >>

)ess: *perating costs K14>,>>> units x >L -,11,>>>2et income >>

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Answer:A. ales /,>>> units J ending finished!goods inventory 1-,>>> units I production

04,>>> units. 2ote: +here is no beginning finished!goods inventory.

B. ince planned and actual production figures are the same, Mim applied > G 04,>>> units.

C. ales revenue ,>>>"ross margin -1>,>>>Cost of goods sold ,>>>

$. Mim attached >>ixed cost in cost of goods sold /,>>> units x ,>>>

6ariable cost of goods sold >>

>> G /,>>> units I ixed cost 1-,>>> units x >>6ariable cost >>

>> G 1-,>>> units I


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Reconci"iation of Absorption% an !ariab"e%Costing Inco&e

04. Beachcraft Corporation has fixed manufacturing cost of >> in a period when finished!goods inventory levels rose by 4,>>> units.

Ca"e C#Absorption!costing net income and variable!costing net income respectivelytotaled ,>>> and ,>>> in a period when the beginning finished!goodsinventory was 10,>>> units.

euired:

A. #n Case A, how many units were sold during the period5B. #n Case B, how much income would Beachcraft report under variable costing5C. #n Case C, how many units were in the ending finished!goods inventory5

)*: 0 +ype: A

Answer:A. Absorption! and variable costing income will be the same amount when inventory levels

are unchanged. +hus, sales totaled 19,>>> units.

B. +he difference between absorption!costing income and variable!costing income is >>4,>>> units x > units 10,>>> ! -,>>.

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Thro#ghp#t Costing0 Absorption Costing0 !ariab"e Costing

09. Coastal Corporation, which uses throughput costing, began operations at the start of thecurrent year. 'lanned and actual production eualed ->,>>> units, and sales totaled 14,>>

units at ,>>>6ariable manufacturing overhead -9>,>>>ixed manufacturing overhead /0>,>>>

elling and administrative costs total 0/>,>>>

+he company classifies direct materials as a throughput cost.

euired:

A. Compute the company?s total cost for the year.B. How much of this cost would be held in year!end inventory under 1 absorption costing,

- variable costing, and / throughput costing5C. How much of the company?s total cost for the year would appear on the period?s income

statement under 1 absorption costing, - variable costing, and / throughput costing5$. Compute the year?s throughput!costing net income.

)*: 1, -, /, 4 +ype: A, 2

Answer:A. $irect materials ->,>>> units x ,>>>

$irect labor 13>,>>>

6ariable manufacturing overhead -9>,>>>ixed manufacturing overhead /0>,>>>elling and administrative costs 0/>,>>>+otal ,>>>

B. +he year!end inventory of -,>> units ->,>>> ! 14,>> is costed as follows:

AbsorptionCosting

6ariableCosting

+hroughputCosting

$irect materials < /3>,>>> ,>>> ,>>>$irect labor 13>,>>> 13>,>>>6ariable manufacturing overhead -9>,>>> -9>,>>>

ixed manufacturing overhead /0>,>>>+otal product cost ,>>> >,>>> ,>>>

Cost per unit +otal G ->,>>> units units x cost per

unit > >,>>> >>



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C. +he total costs would be allocated between the current period?s income statement andthe year!end inventory on the balance sheet. +hus:

Absorption costing: ,>>> ! > I >

6ariable costing: ,>>> ! >,>>> I ,>>>+hroughput costing: ,>>> ! >> I >>

$. +hroughput income: ales revenue 14,>> units x > I >

Thro#ghp#t Costing

0=. Mrell Corporation, which uses throughput costing, began operations at the start of the currentyear ->x1. 'lanned and actual production eualed 0>,>>> units, and sales totaled /,>>>units at per unit. Cost data for ->x1 were as follows:

$irect materials per unit < ->

Conversion cost:$irect labor -1,>>>6ariable manufacturing overhead /0>,>>>ixed manufacturing overhead -9,>>>

elling and administrative costs:6ariable per unit 9ixed -->,>>>

+he company classifies direct materials as a throughput cost.

euired:A. %hat is meant by the term throughput costing5

B. Compute the cost of the company?s year!end inventory.C. 'repare Mrell?s income statement for the year.

)*: 1, 4 +ype: C, A

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!ariab"e% an Absorption%Costing Inco&e State&ents0 !o"#&e !ariance

>. *utdoors Company manufactures sleeping bags that sell for each. +he variable standardcosts of production are . Budgeted fixed manufacturing overhead is >,>>>, and

budgeted production is 1>,>>> sleeping bags. +he company actually manufactured 1-,>>bags, of which 11,>>> were sold. +here were no variances during the year except for thefixed!overhead volume variance. 6ariable selling and administrative costs are .> persleeping bag sold@ fixed selling and administrative costs are >>.

euired:A. Calculate the standard product cost per sleeping bag under absorption costing and variable

costing.B. Compute the fixed!overhead volume variance.C. 'repare income statements for the year by using absorption costing and variable costing.

)*: -, /, = +ype: A

Answer:A. +he absorption cost is K J >,>>> 1>,>>> unitsL, and the variable cost is

.

B. 6olume variance I budgeted fixed overhead ! fixed overhead appliedI >,>>> ! 1-,>> units x

I >> or >>

C. *utdoors CompanyAbsorption!Costing #ncome tatementor the 8ear (nded $ecember /1, ->xx

ales revenue 11,>>> units x ,>>>)ess: Cost of goods sold 11,>>> units x /-0,>>"ross margin at standard < ,>>Add: ixed!overhead volume variance -,>>>"ross margin at actual < />,>>)ess: *perating expenses K11,>>> units x .> J >>L 1>,>>2et income < ->,>>>

*utdoors Company6ariable!Costing #ncome tatement

or the 8ear (nded $ecember /1, ->xx

ales revenue 11,>>> units x ,>>>)ess: 6ar. cost of goods sold 11,>>> units x > 6ar. operating expenses 11,>>> units x .> ,>> -->,>>>Contribution margin ,>>>)ess: ixed costs >,>>> J >> 1>,>>>2et income < ,>>>

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*ISCUSSION QUESTIONS

Absorption Costing0 !ariab"e Costing0 an Ter&ino"og(

1. Absorption and variable costing are two different methods of measuring income and costinginventory.

euired:A. 'roduct costs are defined as costs associated with the manufacturing process. How does

the operational definition of product cost differ between absorption costing and variablecosting5

B. An absorption!costing income statement will report gross profit or gross margin whereas avariable!costing income statement will report contribution margin. %hat is the differencebetween these terms5

C. Boan, #nc., has greatly modified its manufacturing process to reduce non!value!addedactivities and has also adopted the ;ust!in!time philosophy. As a result, the average

finished!goods inventory has dropped from six wee&s? supply to eight business days?supply. #n view of these changes, will the difference in operating income betweenvariable costing and absorption costing be greater or less than in the past5 (xplain.

)*: 1, -, /, 3 +ype: C, 2

Answer:A. +he sole difference between the two methods is that fixed manufacturing overhead costs

are defined as a product cost under absorption costing and as a period cost under variablecosting.

B. "ross profit gross margin is the difference between sales and cost of goods sold. Cost of

goods sold includes variable and fixed manufacturing costs. Contribution margin, on theother hand, is the difference between sales and variable expenses, namely, variable cost ofgoods sold and variable operating expenses. ixed costs are ignored when calculating thecontribution margin.

C. +hese changes should reduce the differences in operating income between absorptioncosting and variable costing. #nventories of wor&!in!process and finished goods are muchsmaller than previously@ thus, changes in inventories will be much less significant, whichreduces differences in income.



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Reconci"iation of Absorption% an !ariab"e%Costing Inco&e

-. +he difference in net income between absorption and variable costing can be explained by thechange in finished!goods inventory in units multiplied by the standard fixed manufacturing

overhead rate.

euired:(xplain why this calculation accounts for the difference noted.

)*: 0 +ype: C

Answer:+he only difference between the two methods is the treatment of fixed manufacturingoverhead. uch amounts are expensed under variable costing whereas with absorptioncosting, a predetermined amount is attached to each unit manufactured. +his applied overheadmoves bac& and forth between the balance sheet and the income statement depending on what

happens to inventory during the period i.e., increase or decrease. Because of this situation,the change in inventory multiplied by the fixed manufacturing overhead per unit correspondswith the difference in reported income between absorption costing and variable costing.

chapter17 (variable & absorption costing)

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