Assignment 1: Discussion—Absorption versus Variable Costing
There are several ways a company can allocate overhead costs to products produced or services provided. Two of these methods are absorption costing and variable costing. This assignment will allow you to explore the two methods of costing and compare/contrast the different uses of each costing system.
Using the module readings and the Argosy University online library resources, research absorption and variable costing. Use your research and/or your experiences as a working professional to complete this assignment.
Respond to the following:
- Explain the differences between absorption costing and variable costing.
- Explain, with the help of an example, how a company could use a variable costing system, as well as an absorption costing system. You have the option of using the company you work for as an example.
- Explain which method is better for the company being discussed.