Main course page
Chapter 6: Variable and absorption costing
Income from operations is one of the most important information reported by a company. Depending on the decision –making needs of management, income from operations can be determined using absorption or variable costing.
By the end of this lesson, you should be able to:
- explain the differences between absorption costing and variable costing system;
- prepare profit statements based on a variable costing and absorption costing system; and
- explain the difference in profits between variable and absorption costing profit calculations.