# Cost Behavior, Cost-Volume-Profit Analysis, and Variable Costing: A Comparison and Application in the Sims Company Case Study

1. Discussion Question In Chapters 18 and 19 of Wild, J., & Shaw, K. (2022) text you learned about cost behavior, cost-volume-profit, and variable costing analysis . View the following YouTube videos
How to Calculate Break Even Points, Contribution Margin, and Target Quantity for a Specific Profit. (n.d.). Www.youtube.com. https://www.youtube.com/watch?v=xNaA-LkA-tY Absorption vs Variable Costing. (n.d.). Www.youtube.com. Retrieved July 19, 2022, from https://www.youtube.com/watch?v=VPFDAx04BZM Once viewed discuss the following with your peers:
What is cost-volume-profit analysis? What are its underlying assumptions and what would you do if assumptions are not met?
How would you compare variable costing and absorption costing using a hypothetical example?
Do research and discuss cost behavior analysis from the company that you work for currently or from a company in your own country? What did you learn in your research?
2. Costing Assignment Based on the content covered in Week 2 and Chapters 18 and 19 of the Wild, J., & Shaw, K. (2022) text, students learned about cost behavior, cost-volume-profit analysis, and variable costing. Students should address the following:
Describe how use of absorption costing in determining income can lead to overproduction and a buildup of inventory. Explain how variable costing can avoid this same problem.
Apply your knowledge of absorption costing and variable costing to solve the following problem:
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows.
A. Prepare an income statement for the year using variable costing.
B. Prepare an income statement for the year using absorption costing.
C. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?
Paper should be 6 pages including the calculations and the income statements in A and B.

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