# Absorption Costing: Income Statement & Marginal Costing

Instructions:

question 1 of 3

### Which costing method results in a higher reported net income?

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### 2. What is the cost of goods sold under absorption costing given the following information? Beginning inventory = \$5,000 Direct materials = \$1,000 Direct labor = \$2,000 Variable manufacturing overhead = \$800 Fixed manufacturing overhead = \$1,200 Ending inventory = \$200

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To pass the quiz and worksheet combination, you have to be familiar with the financial vocabulary discussed in the lesson. You must also know how to calculate cost in given situations.

## Quiz & Worksheet Goals

• The calculation of the cost of goods
• Which costing system is used for external reporting per accounting standards
• The method of costing that yields a higher reported net income

## Skills Practiced

• Knowledge application - use your knowledge to calculate the cost of goods for a given set of numbers
• Reading comprehension - ensure that you draw the most important information from the lesson on absorption costing
• Distinguishing differences - compare and contrast concepts from the lesson such as absorption and marginal (or variable) cost

Learn more about accounting by completing the lesson titled, Absorption Costing: Income Statement & Marginal Costing. The objectives covered include:

• Define direct materials and direct labor
• Review the function of an income statement
• Distinguish between variable and fixed manufacturing overhead
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