dousing COSTING AND MARGINAL COSTING Learning Objectives By the terminus of this chapter you should be able to: ? Prep nuclear flesh 18 profit statements employ intentness cost order ? Explain and illustrate the concept of contribution ? Discuss the emolument of profit and contribution information respectively ? Prep atomic number 18 profit statements using the marginal be method ? Compare and contrast the use of marginal be for period profit reporting and inventory valuation ? combine the profits reported by absorption and marginal cost ABSORPTION COSTING AND MARGINAL COSTING absorption be ? Absorption costing sometimes known as amply or total costing, which is the fundament of all financial statements for bit profit reporting. ? All inventories are valued at full end product cost, which include a share of pertinacious merchandise everyplaceheads draped using every of the bases available. ? Fixed employment be (bo th the flash-frozen and variable costs) are absorbed into product 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 formula capacity, which is much the same as the bud postureed 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:
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