The table that follows denotes selected characteristics of absorption costing and/or variable costing.

\begin{array} { | l | l | l | } \hline { \text { Characteristic } } & \text { Absorption Costing } & \text { Variable Costing } \\\hline \text { Product cost: } & & \\\hline \text { Direct materials } & & \\\hline \text { Direct labour } & & \\\hline \text { Variable manufacturing overhead } & & \\\hline \text { Fixed manufacturing overhead } & & \\\hline \text { Period cost: } & & \\\hline \text { Variable selling and administrative cost } & & \\\hline \text { Fixed selling and administrative cost } & & \\\hline \text { Fixed manufacturing overhead } & & \\\hline \text { Income statement disclosure/ andience: } & & \\\hline \text { Gross margin } & & \\\hline \text { Contribution margin } & & \\\hline \text { Lower net income when inventories rise } & & \\\hline \text { External financial-statement users } & & \\\hline\end{array}

Required:
Evaluate each product-cost, period-cost, and income-statement/disclosure characteristic and determine whether it relates to absorption costing, variable costing, or both methods. Place an "X" in the proper column.

Management May Be Tempted to Overproduce

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge