Tuesday, July 22, 2008

Manufacturing Overhead Variable Cost

When an accountant treats fixed manufacturing overhead as a variable cost, it can lead to many accounting errors:

  • Lead to faulty pricing decisions and keep/drop management decisions.
  • Produce a positive net operating income when the number of units sold is less than the break even point.
Additional Accounting Help:

Assumptions of CVP Analysis
Absorption Costing and CVP Analysis
CVP Relationships and Income Statement

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