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Absorption Costing
The process described in this section by that net overheads are absorbed into production naturally enough is identified as absorption costing. The absorption of net overheads into product costs has implications for performance measurement, and stock valuation and cost control and students should be aware about the process described is subject to criticism via some accountants and managers.
The criticism arises from the fact such overheads contain items, identified as fixed costs - that do not change when the activity level changes and that would now have to be paid whether there was no activity, as an example of rates - and items, identified as variable costs, that vary more or less directly along with activity, as an example of power consumption. To overcome some of the problems, an alternative way of costing has been developed, identified as marginal costing, that, though by using the process of absorption, eliminates fixed costs from the absorption process.
Requirement for additional Funds A business would require additional capital for two purposes: 1. Financing additional fixed assets, and
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Link between Financial and Cost Books The link among the two sets of books is achieved via operating a cost ledger control account and a financial ledger control account. Cos
types of operating costing
i want to know the different types of costs.
using relevant examples discuss the meaning and scope of cost accounting
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If a company trades in a building towards a new building and does not recognize a gain or loss (because of code section 1031), will this transaction affect the cash flows statement
Marginal Costing and Marginal Cost Marginal Costing is an optionally method of costing to absorption costing , In marginal costing, merely variable costs are charged like a
Ask q6) The Net Sales revenue reported is derived from the sale of products. Each year Findley records from cash sells, sells on account and completed purchase orders. During 2016
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