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Absorption cost
Absorption, or full cost systems, transfer the full cost of the supplying department to the receiving department. Where a profit is to be allowed to the supplying division, it is necessary to determine a policy which can be consistently applied. Typical systems may allow a profit based on cost, sales or investment.
Variable cost
Variable cost based systems overcome the decision-making problem of full cost system. Transfers from one division to another are made at variable cost. Standard variable cost overcomes the problem of passing on inefficiencies and diseconomies from division to division.
There are two ways by which profits can be created at a divisional level. The first approach is to apply the principles illustrated in A to marginal costing. Transfer pricing schemes would allow a suitable level of contribution, as measured in terms of contribution on sales ratio. An alternative approach is to create a two-part charging system. One part of the scheme would transfer a lump sum, representing an allowance for divisional fixed cost once a year to allow each division the chance of creating a final profit. The second part of the scheme would value transfers at variable cost.
EXTRA SHIFT DECISION These decisions are concerned with whether or not a company should work for 8 hrs, 16hrs, or 24 hrs a day or week days only or weekends also. The factors
useroffinancialstatement
Question 1: Assuming that you are appointed consultant on economic matters for a company and you are asked to analyse the market structures in various sectors of the economy.
1. Calculate the manufacturing costs for the year. 2. Prepare a statement of cost of goods manufactured. 3. Prepare an income statement (assume an income tax 25%)
Determine the Distribution cost and Research cost Distribution cost: The cost of sequence of the operations which begin with making the packed product available for dispa
companyXYZusesthe job oder costing system.
What is performance budgeting The concept of performance budgeting is used mainly in the government and public sector undertakings. It projects the government activities an
1. Common-size analysis of company''s income statement, Balance sheet 2. Horizontal analysis of company''s income and balance sheet : for the last two years for both 3.perform rati
First Cut Analysis of Costs The allocation of costs and assets will produce a value chain that illustrates graphically the distribution of a firm's costs. It can prove reveali
Deposits from the public are one of the important sources of finance mainly for fine established big companies along with a vast capital base. The period of public deposits is rest
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