Behavior How Do You Think Research Paper

Open, View, and/or
Download this Document

Total Length: 651 words ( 2 double-spaced pages)

Total Sources: 2

Page 1 of 2



2. In your opinion, would stakeholders benefit from external reports that use variable costing for reporting? Give examples.

Variable costing is a costing method under which those costs of production that vary in relation to output are treated as product costs, it is commonly compared to absorption costing which is a method that treats all production costs as product costs regardless whether they are fixed or variable. Using variable costing can be beneficial to stakeholders due to the advantages in holds over the absorption costing. For instance, under variable costing, profits move in the same direction as sales since the profit for a period is not affected by changes in inventories considering factors such as costs, selling prices etc. are constant. This is an advantage to the stakeholders who are more concerned about the profits from which they benefit. When variable costing is used it is also easier to estimate the profitability of products, customers, and other sections of the business.

Stuck Writing Your "Behavior How Do You Think" Research Paper?

View All Our Example Behavior How Do You Think Research Paper

Have A Custom Example Essay Written

When absorption costing is used, profitability is made incomprehensible by capricious allocations of fixed costs. The other advantage that variable costing has that is relevant the stakeholders is that it is closer to net cash flow, a factor that is very significant for companies that experience cash flow problems.

These advantages will assist stakeholders, mostly those who are part of the ownership that is shareholders, to track and monitor the performance of the business thus do not lose their gains from the business that may be caused by financial mismanagement or misinformation. It has to be noted however that most managers do not prefer variable costing and would rather use absorption costing for both internal and external reporting (Accountingformanagement.com, 2009)......

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Behavior How Do You Think" (2010, March 27) Retrieved May 15, 2024, from
https://www.aceyourpaper.com/essays/behavior-think-1067

Latest MLA Format (8th edition)

Copy Reference
"Behavior How Do You Think" 27 March 2010. Web.15 May. 2024. <
https://www.aceyourpaper.com/essays/behavior-think-1067>

Latest Chicago Format (16th edition)

Copy Reference
"Behavior How Do You Think", 27 March 2010, Accessed.15 May. 2024,
https://www.aceyourpaper.com/essays/behavior-think-1067
   

Open, View, and/or
Download this Document
order custom essay example