7-1 What is the difference between absorption costing and variable costing? 7-2 Are selling and administrative expenses treated as product costs or as period costs under variable 7-3 Explain how fixed manufacturing overhead costs are shifted from one period to another under costing? 7-4 What are the arguments in favor of treating fixed manufacturing overhead costs as absorption costing. 7-5 product costs? 7-6 What are the arguments in favor of treating fixed mants produced equals the units sold, which method would you expect to show the higher net operating income, variable costing or absorption costing? Why? 7-7 If the units produced exceed the units sold, which method would you expect to show the higher net operating income, variable costing or absorption costing? Why? 7-8 If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production in relation to the level of unit sales? 7-9 Under absorption costing, how is it possible to increase net operating income without increasing 7-10 How does Lean Production reduce or eliminate the difference in reported net operating income sales? between absorption and variable costing? 7-11 What is a segment of an organization? Give several examples of segments. 7-12 What costs are assigned to a segment under the contribution approach? 7-13 Distinguish between a traceable fixed cost and a common fixed cost. Give several examples 7-14 Explain how the contribution margin differs from the segment margin. of each. 7-15 Why aren't common fixed costs allocated to segments under the contribution approach? 7-16 How is it possible for a fixed cost that is traceable to a segment to become a common fixed cost if the segment is divided into further segments? 7-17 Should a company allocate its common fixed costs to business segments when computing the break-even point for those segments? Why