Costing Methods Paper Essay Example for Free

Costing Methods Paper Essay multivariate and submersion costing methods atomic number 18 two different costing methods. Almost all successful companies in the world use some(prenominal) methods. Variable costing and absorption costing cannot be substituted for one another because both the systems have their witness advances and limitations (Accounting for management). This paper will complete and discuss exercise 19-17 in Wiley Plus it will discuss the quest questions In this case, would it be better 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 overhead that allocates to the 80,000 units sold. Whereas the variable method counts the touch on overhead as a period 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 are th e benefits of the two methods? two 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 lead to the topper decision when a competitor is submitting a lower bid 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 drudgery cost are period cost. Variable costing method helps with demand based pricing.ReferencesAccounting for management. (n.d.). Variable costing versus absorption costing. Retrieved from http//www.accountingformanagement.org/variable-vs-absorption-costing/