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A company that uses standard costing wishes to reconcile the difference between the profit for a period calculated using absorption costing with that calculated using marginal costing.
Which TWO of the following will NOT help with this reconciliation? (Choose two.)
Suggested Answer: A, E
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40 comments · newest first
HO
Holley
11 months ago
I thought actual fixed overheads might play a role, but guess not!
RO
Rozella
11 months ago
Closing and opening inventory are key for this!
AR
Aretha
11 months ago
Wait, how can the fixed overhead absorption rate not help?
VI
Vilma
12 months ago
Totally agree, A and E are irrelevant here.
LA
Lashunda
12 months ago
A and E won't help with the reconciliation.
HE
Helene
1 year ago
I’m leaning towards the under or over absorbed fixed production overheads being important, but I’m uncertain about the actual fixed production overheads.
LA
Lashawnda
1 year ago
I feel like the opening inventory might play a role, but I can't recall if it directly affects the profit calculations between the two costing methods.
IL
Ilda
1 year ago
I remember practicing a similar question, and I think the fixed production overhead absorption rate is definitely not relevant for this reconciliation.
LU
Luis
1 year ago
I think the actual fixed production overheads won't help with the reconciliation, but I'm not entirely sure about the closing inventory.
EM
Emerson
1 year ago
I've got this! The closing inventory, opening inventory, and fixed production overhead absorption rate wouldn't directly impact the reconciliation between the two costing methods. Those are my two picks.
AV
Avery
1 year ago
Okay, let's see. The actual fixed production overheads and the under or over absorbed fixed production overheads would both be important for the reconciliation, so I'll rule those out.
RO
Ronny
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to think through the differences between absorption and marginal costing to figure out which factors wouldn't be useful for the reconciliation.
AM
Amie
1 year ago
This question seems straightforward. I think I can eliminate the options that would help with the reconciliation.
GL
Gladis
1 year ago
I'm a little confused on how to approach this. I'll need to review my notes on the differences between absorption and marginal costing to determine which factors wouldn't be helpful for the reconciliation.
LO
Louvenia
1 year ago
This seems like a straightforward question about changes in accounting principles versus changes in accounting estimates. I think the key is to carefully consider the details provided in the question and match them to the options in List A.
HA
Han
1 year ago
The key is understanding the relationship between child and parent lots. The statements about child lots being unique/independent or having completely different characteristics seem questionable to me.
CA
Cammy
1 year ago
I'm pretty sure the answer is text-decoration, since that's the property used to add lines to text.
CA
Cathrine
2 years ago
Ah, the age-old battle between absorption and marginal costing. I bet the accountants are having a field day with this one!
KI
Kiley
2 years ago
C) The opening inventory.
KA
Karol
2 years ago
B) The closing inventory.
EM
Emerson
2 years ago
A) The actual fixed production overheads.
TU
Tuyet
2 years ago
C: The fixed production overhead absorption rate.
TH
Therese
2 years ago
B: The under or over absorbed fixed production overheads.
SU
Sue
2 years ago
A: The closing inventory and the opening inventory.
SH
Shaniqua
2 years ago
I see your point, Colton. The fixed production overhead absorption rate is also crucial in understanding the difference between the two costing methods.
CO
Colton
2 years ago
I believe the actual fixed production overheads and the under or over absorbed fixed production overheads are more important for reconciliation.
MA
Margarett
2 years ago
Hmm, I was about to say the fixed production overhead absorption rate, but then I realized that would actually help with the reconciliation. Better not overthink this one!
MA
Margery
2 years ago
B) The closing inventory.
LE
Leandro
2 years ago
A) The actual fixed production overheads.
GR
Graham
2 years ago
The under or over absorbed fixed production overheads seem like the key item here. That's where the difference between the two costing methods really comes into play.
FR
Francoise
2 years ago
Wow, this is a tricky one! I'm pretty sure the opening and closing inventory values are crucial for reconciling the profits under the two costing methods.
RE
Rebecka
2 years ago
D) The under or over absorbed fixed production overheads.
MO
Mona
2 years ago
C) The opening inventory.
JO
Josephine
2 years ago
B) The closing inventory.
NI
Nieves
2 years ago
A) The actual fixed production overheads.
KE
Keshia
2 years ago
I agree with Julian. The closing and opening inventory are not relevant to the difference between absorption and marginal costing.
RO
Roslyn
2 years ago
The actual fixed production overheads and the fixed production overhead absorption rate are definitely not needed for this reconciliation. Those are more relevant for the standard costing process itself.
EL
Elly
2 years ago
E) The fixed production overhead absorption rate.
SU
Suzi
2 years ago
A) The actual fixed production overheads.
JU
Julian
2 years ago
I think the closing inventory and the opening inventory will not help with the reconciliation.