1. Be able to compute the unit cost under both absorption and variable costing (ie what costs go into each and what are the difference2.

• Does variable or absorption costing produce a higher net income when:
  • units produced equal units sold?
  • units produced is greater than units sold?
  • units produced is less than units sold?
• Is variable or absorption costing acceptable under GAAP? Which is the better method for short-term decisions?