Description
Answer each question 200 words.
What are the two types of alternative income statements? What are some examples of how alternative income statements are used in decision making?
What is cost behavior and how does it impact a financial analysis? What processes does your company or a previous employer use to analyze cost behavior?
Explanation & Answer
Attached.
Running head: COST BEHAVIOR AND INCOME STATEMENTS
Cost behavior and income statements
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COST BEHAVIOR AND INCOME STATEMENTS
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There are two types of alternative income statements: absorption costing and variable
costing formats (Horngren, Bhimani, Datar, Foster & Horngren, 2002). Absorption costing is a
method of costing in which all production costs are treated as product costs without taking into
account if they are fixed or variable. In this system of costing, a product cost comprises all the
direct material costs, labor costs; and fixed and variable overheads. In variable costing, all
vari...
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