1. Discuss the differences between centralized and decentralized decision making.
2. What is decentralization?
3. Explain why firms choose to decentralize.
4. What is the one difference between the way costs are assigned under variable and absorption costing?
5. If production is greater than sales, why is absorption-costing income greater than variable- costing income?
6. The fixed overhead expense recognized on an income statement was $100,000. The fixed overhead for the period was $80,000. Was the income statement prepared using absorption costing or variable costing? Explain.
7. Why is variable costing better than absorption costing for the evaluation of segment performance?
8. Why is variable costing better than absorption costing for planning and controlling costs?
9. What is the difference between a direct fixed cost and a common fixed cost? Why is this difference important?
10. What is the difference between contribution margin and segment margin?
11. Explain how income under absorption costing can increase from one period to the next even though selling prices and costs have remained the same.