Discussion Questions 1. What types of costs are customarily included in the cost of manufactured products under (a) the absorption costing concept and (b) the variable costing concept? and Which type of manufacturing cost (direct materials, direct labor, variable factory overhead, fixed factory overhead) is included in the cost of goods manufactured under the absorption costing concept but is excluded from the cost of goods manufactured under the variable costing concept? 2. In the variable-cost income statement, how are the fixed manufacturing costs reported, and how are the fixed selling and administrative expenses reported? 3. Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies. 4. Explain why rewarding sales personnel on the basis of total sales might not be in the best interests of a business whose goal is to maximize profits and Explain why service companies use different activity bases than manufacturing companies to classify costs as fixed or variable. 1. What are the three major objectives of budgeting? What behavioral problems are associated with establishing conflicting goals within the budget? 2. Why should the production requirements set forth in the production budget be carefully coordinated with the sales budget? 3. a. Discuss the purpose of the cash budget. b. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used? 4. Give an example of how the capital expenditures budget affects other operating budgets