Comparing Variable and Absorption Costing Homework Help

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Costing is a method to chalk out the expenditure of a business perfectly. In the field of business, costing is the most important part. It plays a significant role in making a good profit mount and to make the business run smoothly. Without proper costing, a business cannot run for long run. Costing process is of two types –

  • Variable process

Track out only the cost of uniting product of variable expenses such as direct raw materials, directly involved labours, the manufacturing overhead which is varied, etc.

  • Absorption process

It calculates per unit cost of the whole expenditure, the summation of variable and fixed manufacturing cost.

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Something more about the topic

Variable and absorption costing are two different processes to calculate the production expenditure of a business organisation. As they are different, so there are some comparisons such as –

  • Absorption process includes all the direct cost, fixed overhead production cost and variable overhead production cost.

Variable process includes only direct cost and variable overhead production cost.

  • The fixed overhead cost for manufacturing per unit product in variable cost is taken as expenses only for that time when they are spent.

But in the case of absorption process, fixed overhead cost for manufacturing per unit product is treated as an expense at the time of product sale.

  • Absorption costing process is quite more recommendable than variable costing process regarding determination of proper pricing for the product. It is because of absorption costing process considers all the manufacturing costs of production.

Variable costing process as includes only the variable cost that is involved directly with the production hence it is not much in use for proper pricing. It is only useful to create breakeven situations for nonprofit organisations.

  • Since, absorption costing includes all sorts of fixed costs, hence, while payment of rents or taxes and keeping track of it, this costing method comes into playing a vital role.These requirements naturally cannot be fulfilled with the other methods.

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Why homework help is required

It is an accounting subject topic, and accounts server stand alone. It is the combination of several subjects. Students have to cope- up with all these.Moreover,differentiating the direct cost and total cost is not so easy in every case. A bold and clear concept needs to be developed about the subject for doing their homework. For these reasons, you need an accurate comparing variable and absorption costing homework help.

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