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Cost Flows Part 5

 

In an earlier module, we distinguished between absorption costing [required for GAAP] and variable costing, which is especially useful in a variety of managerial analyses. A notable example of the latter is breakeven and CVP analysis. The diagram below is an attempt to conceptualize the difference between absorption and variable costing and the impact of each on the income statement. You may want to review the discussion of cost classifications as you study this diagram. Use the navigation bar below to go to the topics you want to review.

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Cost Classifications | Cost Behavior | Contribution Margin | Traceability | Function

Copyright 2004 Gerald M. Myers. All rights reserved. This site has been developed as aid to instructors and students in managerial accounting. The scenarios contained herein are not intended to reflect effective or ineffective handling of managerial situations. Any resemblance to existing organizations is purely coincidental.
Last modified: August 03, 2005