Costing Methods Paper Essay

Variable and submersion be modes ar two different costing methods. Almost tout ensemble successful companies in the world use both methods. Variable costing and absorption costing cannot be substituted for one another because both the systems take a shit their own receiptss and limitations (Accounting for focusing). This paper will complete and discuss exercise 19-17 in Wiley Plus it will discuss the following questions In this case, would it be fracture to use the variable or absorption costing method, and why? In this example Polk Company should use the absorption method, because the absorption only uses budget items that allocates to the 80,000 units sold. Whereas the variable method counts the fixed overhead as a intent expense, the fixed overhead during this period is calculated on 95,000 units produced, when the absorption method is used. The variable method just calculates fixed overhead on 80,000 units sold.What be the benefits of the two methods?Both systems have their own benefits and limitations. The absorption method gives management information 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 pull up stakes to the best decision when a competitor is submitting a lower attender 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 achievement cost are period cost. Variable costing method helps with crave based pricing.ReferencesAccounting for management. (n.d.). Variable costing versus absorption costing. Retrieved from http//www.accountingformanagement.org/variable-vs-absorption-costing/