Costing Methods Paper Essay

inconstant and soaking up be manners ar two different costing orders. intimately all successful companies in the beingness use both rules. Variable costing and density costing cannot be substituted for one(a) another because both the systems have their cause make headways and limitations (Accounting for management). This paper exit complete and talk about exercise 19-17 in Wiley Plus it will discuss the following questions In this case, would it be better to use the inconstant or absorption costing manner, and why? In this example Polk Company should use the absorption method, because the absorption only uses hit that allocates to the 80,000 units sold. Whereas the variable star method counts the fixed overhead as a period expense, the fixed overhead during this period is calculated on 95,000 units produced, when the absorption method is used. The variable method good calculates fixed overhead on 80,000 units sold.What atomic number 18 the benefits of the two met hods?Both systems have their accept benefits and limitations. The absorption method gives management schooling of product cost this is the main benefit of the absorption method. The benefit of the variable method is it gives an output the mimics the cash flow of the company. Which method would lead to the best decision when a competitor is submitting a lower telephone for your product? The absorption method would be best although both methods are used, with variable costing expenses remains the same, and with the absorption method fixed production cost are period cost. Variable costing method helps with demand based pricing.ReferencesAccounting for management. (n.d.). Variable costing versus absorption costing. Retrieved from http//www.accountingformanagement.org/variable-vs-absorption-costing/