Absorption costing and marginal costing

Abstract The paper is for the pecuniary management and sharpen on 2 all consequential(predicate) hailing manners, the absorption cost and marginal be. break up on the display case of Simpson Ltd, it for work be given the earnings calculated by each(prenominal) method, and show the process and overly apologize the reason of different result. Furthermore, these two methods will be compared in the other situation in order to establish the rude(a) theory of both of them. On the other hand, it also will try to discuss the advantage and disfavor of each method in financial reporting and management decision-making, so proof will be given to present the last personalized opinion. Introduction Cost accounting system is one of the most important parts of accounting system, and it plays a signifi preemptt role in so many areas of business like decision-making or financial report. ducking costing and marginal costing, which are both the cost accounting met hods but have the completely difference concept. such(prenominal) difference concepts endlessly result in a different figure of profits, and this is the focus of argument about the advantage and disadvantage of each costing methods. In order to understand the constitution of these two costing methods and further discuss their strength and weakness, we can use the example of Simpson Ltd.

Account The basic data of Simpson Ltd in 2007 Budget sales 30,000 units Selling price £ 35 Variable cost £ 15 Fixed production cost £ 300,000 Absorption rate ! £ 10 authentic production 45,000 units veritable sales 20,000 units Opening line of descent 0 units Production 45,000 units Closing stock = Production Actual sales = 45,000 20,000 = 25,000 units Sales = Selling price * Actual sales = 35 * 20,000 = £700,000 The profits of Marginal Costing £ £ Sales...If you want to get a dear essay, order it on our website: OrderCustomPaper.com

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