Variable Costing and Samanta Shoes:
Samanta Shoes, which was launched by entrepreneurs Samanta and Kelvin Joseph, produces high-quality shoes in unique styles and limited quantities. Selling prices for a pair of Samanta Shoes can range from $100 per pair to $350 per pair.
1. Based on information in this chapter’s opening, identify at least four examples of the types of costs that likely explain the wide range of shoe selling prices. Be sure to justify your responses, not just show a listing of costs.
2. The founders of Samanta Shoes use variable costing in their business decisions. If Samanta Shoes used absorption costing, would you expect the company’s income to be more than, less than, or about the same as its income measured under variable costing? Explain.
Your paper should be from one to two pages in length. It should be well-thought out and free of spelling and grammatical errors. Be sure to state the reasons for your answers. You may wish to explain the difference in variable and absorption costing in explaining your difference in income.