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A NOTE ON THE POSSIBILITY OF INCOME MANIPULATION THROUGH THE ABSORPTION OF FIXED OVERHEAD
Author(s) -
Winsen Joseph K.
Publication year - 1979
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.1979.tb00203.x
Subject(s) - overhead (engineering) , activity based costing , fixed cost , affect (linguistics) , absorption (acoustics) , volume (thermodynamics) , computer science , operations management , economics , microeconomics , physics , optics , psychology , accounting , communication , quantum mechanics , operating system
In an absorption costing system manipulation of budgeted fixed manufacturing costs and “normal volume” can affect reported net income. This note outlines the relationships involved and how they are affected by the treatment of under or over‐applied overhead.