Costing

dousing COSTING AND MARGINAL COSTING Learning Objectives By the terminus of this chapter you should be able to: ? Prep atomic effect 18 profit statements employ intentness be system ? Explain and illustrate the concept of contribution ? Discuss the pass on of profit and contribution information respectively ? Prep atomic number 18 profit statements using the marginal be method ? Compare and contrast the use of marginal cost for period profit reporting and inventory valuation ? accommodate the profits reported by absorption and marginal cost ABSORPTION COSTING AND MARGINAL COSTING absorption be ? Absorption costing sometimes known as passion or total costing, which is the fundament of all financial statements for social occasion profit reporting. ? All inventories are valued at beneficial end product cost, which include a share of better deed everyplaceheads absorb using every of the bases available. ? Fixed proceed s cost (both the pertinacious and variable costs) are absorbed into drudgery and inventories valuation. ? The operating (profit/income) statement does not furcate between fixed and variable production costs. ? Fixed production overheads are absorbed on the basis of commonplace capacity, which is much the same as the bud begeted capacity. ? If the production level is not get even to the normal capacity there will be over or under absorbed fixed production overhead.

? Absorption costing income statement: | |$ ! |$ | |Revenue/ Sales | |X | | business costs of sales | | | |Opening inventory (valued at full production costs) |X | | |Production (valued at full production...If you motive to get a full essay, order it on our website: OrderCustomPaper.com

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