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(Solved): In Order To Comply With Generally Accepted Accounting Principles (GAAP), Companies Must Use Absorpti ...

In order to comply with Generally Accepted Accounting Principles (GAAP), companies must use absorption costing to report income statement. However, the most successful companies use variable and absorption costing methods for their managerial purposes.

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  • Discuss the pros and cons of absorption and variable costing as the basis for the selected company’s product costing.

Expert Answer

ANS: Variable costingis generally used for internal reportingpurposes.Managerialdecisions are taken onthebasis ofvariable costing.Absorption costingis used for reporting totheext
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