Comment the reason of why absorption costing is preferable than marginal costing.
Comment the 5 reason of why absorption costing is preferable than marginal costing.
Homework Answers
Absorption costing as the basis for pricing:
-The proponents of ‘absorption costing’ argue that absorption costing is preferable as the basis for pricing decision because they think that fixed manufacturing overhead is a necessary cost incurred in the production process.
-If the fixed manufacturing overheads are not included, the cost of the product will be understated.
-Hence, companies which use cost based pricing base their prices on ‘absorption costing data’ so as to recover all the costs.
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Comment the reason of why absorption costing is preferable than marginal costing.
why do proponents of absorption costing argue that absorption costing is preferable as the basis for...
why do proponents of absorption costing argue that absorption costing is preferable as the basis for pricing decisions?
Which allocation base is preferable under traditional costing and why? Which costing system (traditional or activity-based)...
Which allocation base is preferable under traditional costing and why? Which costing system (traditional or activity-based) is preferable in pricing decisions and why?
cost accounting
Baker Asia produces and sells a single product, “Cheese Brownies”. The following data have been extracted from its budget and standard cost for the year 2019: RMSelling price per unit 80Manufacturing cost: Variable per unit produced 15Direct materials 7 Variable overhead 4 Fixed production overhead costs are budgeted at RM 180,000 per annum. Normal production levels are expected to be 9,000 units per annum. Budgeted selling and administrative cost are as follows: Variable per unit sold ...
marginal costing & absorption costing
Baker Asia produces and sells a single product, “Cheese Brownies”. The following data have been extracted from its budget and standard cost for the year 2019: RMSelling price per unit 80Manufacturing cost: Variable per unit produced 15Direct materials 7 Variable overhead 4 Fixed production overhead costs are budgeted at RM 180,000 per annum. Normal production levels are expected to be 9,000 units per annum. Budgeted selling and administrative cost are as follows:Variable per unit sold ...
marginal costing & absorption costing
Baker Asia produces and sells a single product, “Cheese Brownies”. The following data have been extracted from its budget and standard cost for the year 2019: RMSelling price per unit 80Manufacturing cost: Variable per unit produced 15Direct materials 7 Variable overhead 4 Fixed production overhead costs are budgeted at RM 180,000 per annum. Normal production levels are expected to be 9,000 units per annum. Budgeted selling and administrative cost are as follows:Variable per unit sold ...
TASK 2 2.1 Distinguish between any three (3) differences Absorption and Marginal Costing using the template...
TASK 2 2.1 Distinguish between any three (3) differences Absorption and Marginal Costing using the template below: (E3:3.1) (1.5 MARKS X 6 = 9 MARKS) ABSORPTION COSTING MARGINAL COSTING 1. 2. 2. 3.
QUESTION 20 Product costs under variable costing are typically: A. higher than under absorption costing B....
QUESTION 20 Product costs under variable costing are typically: A. higher than under absorption costing B. lower than under absorption costing C. the same as with absorption costing D. higher than absorption costing when inventory increases
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing...
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period. O True False
Assessment 2 2.2 Compare and contrast on inventory valuation and profit determination between Absorption and Marginal...
Assessment 2 2.2 Compare and contrast on inventory valuation and profit determination between Absorption and Marginal Costing using the template below: (E3:3.2) (8 MARKS) MARGINAL COSTING ABSORPTION COSTING Inventory Valuation Profit Determination 2.3 Evaluate any two benefits / advantages each of absorption and marginal costing (E3:3.3) (8 MARKS) Benefit/ MARGINAL COSTING ABSORPTION Advantage COSTING
1. What is absorption costing? 2. How is job-order costing different from process costing? 3. Why...
1. What is absorption costing? 2. How is job-order costing different from process costing? 3. Why would a company choose one method over the other? 4. Provide a real-world example of a company that might use job-order costing (use an example not listed in the textbook).
TASK 2 2.1 Distinguish between any three (3) differences Absorption and Marginal Costing using the template below: (E3:3.1) (1.5 MARKS X 6 = 9 MARKS) ABSORPTION COSTING MARGINAL COSTING 1. 2. 2. 3.
QUESTION 20 Product costs under variable costing are typically: A. higher than under absorption costing B. lower than under absorption costing C. the same as with absorption costing D. higher than absorption costing when inventory increases
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period. O True False
Assessment 2 2.2 Compare and contrast on inventory valuation and profit determination between Absorption and Marginal Costing using the template below: (E3:3.2) (8 MARKS) MARGINAL COSTING ABSORPTION COSTING Inventory Valuation Profit Determination 2.3 Evaluate any two benefits / advantages each of absorption and marginal costing (E3:3.3) (8 MARKS) Benefit/ MARGINAL COSTING ABSORPTION Advantage COSTING
1. What is absorption costing? 2. How is job-order costing different from process costing? 3. Why would a company choose one method over the other? 4. Provide a real-world example of a company that might use job-order costing (use an example not listed in the textbook).
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