1- Absorption costing and variable costing are alternative methods to calculate product cost. How do they differ? Why do they differ? Does sales effect one but not the other. Does production effect one but not the other? Do sales and/or production have an effect on one but not the other? How is net operating income calculated using absorption costing versus variable costing and when and what other temporary (income statement) or permeant (balance sheet) accounts are effected?

2- Segmented income statements provide a way to evaluate performance. But some costs are just not relevant in calculating segmented income. Why? What are these irrelevant costs, and give me 3 examples.

3- There are several budgets in a master budget, but one is the heart beat where all others funnel into. Which budget is it? And explain the need to see the sources and uses in that budget?