1. Approximately how busy (relative to a normal month) was the factory in August? 2. can you construct an income statement for a "normal" month under both absorption costing and direct costing? analy

1. Approximately how busy (relative to a normal month) was the factory in August?

2. can you construct an income statement for a “normal” month under both absorption costing and direct costing? analyze the profit variance for August versus a normal month.

3.be prepared to explain the profit differences shown in Exhibits 1 and 2 ($-22928 vs. $34272) and in Exhibits 3($14036 vs. -59432)

4.Could the problem in the case arise with respect to annual income statements?

5.From a managerial perspective, how does graham inc. earn a profit? Which costing system best reflects the basic economics of the business?

6.What do you recommend?

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