August 2011
Beginner to intermediate
750 pages
26h 1m
English
Content preview from Managerial: Accounting
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Focus On
VARIABLE AND ABSORPTION COSTING
After studying this focus unit, you should be able to meet the following learning objectives (LO).
- Explain the difference between variable costing and absorption costing.
- Calculate operating income under variable costing and absorption costing.
The Pitch
Kathy Stewart, CEO of Bradley Textile Mills, couldn't understand why predicting income from one period to the next was so difficult. She had been told by her accounting staff that a yard of fabric costs $3.60 to make. At a selling price of $4.00 per yard, she figured the company should make $0.40 on each yard sold. But every month when she ran the numbers, the actual results never seemed to match her predictions.
Kathy confronted CFO Michael Schwaig. “Either it costs $3.60 to make a yard of fabric or it doesn't,” she said. “How can I predict sales and costs accurately from one period to the next?” “Income depends on how much we produce and how much we sell,” Mike responded. “We've discussed variable and fixed costs before. If we ramp up production and spread our fixed costs over more yards of fabric, we can reduce the cost to produce each yard and increase our margin. Producing more units ...
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O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.