Costing Methods Essay

Polk society is in the business of selling custom fishing lures. Recently they unyielding to introduce a new product. Before they introduce the product they would same(p) to know if variable or compactness cost is the best manner for the company.Variable and Absorption Costing MethodAbsorption costing is when alone manufacturing costs ar absorbed by the product and shows a high net income (Kieso, Kimmel, & Weygandt, 2011). Based on the 80,500 lures Polk political party sold in 2012, absorption costing is the preferred method to use because they have a high net income comp bed to the variable method.BenefitsThe benefit of absorption costing for Polk Company is they leave behind show a higher net income of the products in inventory that are not sold immediately. On the contrary, if Polk Company uses variable costing they go through any profit or loss almost immediately because each expenses are paid during the current accounting period, even if all the products are not sol d.Competition and BiddingAbsorption costing is the better costing method for Polk Company to use against a competitor who has submitted a light name. As stated previously, absorption costing does not require Polk Company to show any expenses on the products they are offering in the bid because they do not have to show expenses until after the products are sold. evidenceIn conclusion, Polk Company should introduce the new fishing lures by employ the absorption costing method, and for submitting product bids.ReferencesKieso, D., Kimmel, P., & Weygandt, J. (2011). Accounting Tools for Business Decision Making, 4e (4th ed.). Retrieved from The University of phoenix eBook Collection database.