Abstract The paper is for the pecuniary management and focalization on 2 all classic(predicate) hailing rules, the absorption cost and marginal cost. nibble on the theoretical account of Simpson Ltd, it testament be given the net income calculated by each(prenominal) method, and show the process and overly formulate the reason of different result. Furthermore, these two methods will be compared in the other situation in order to establish the inherent 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 finish will be given to present the last own(prenominal) opinion. Introduction Cost explanation 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. immersion costing and marginal costing, which are both the cost account ing methods but have the completely difference concept. such(prenominal) difference concepts everlastingly 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 Bud pop out gross gross sales 30,000 units Selling price £ 35 Variable cost £ 15 Fixed production cost £ 300,00! 0 Absorption rate £ 10 authentic production 45,000 units developed sales 20,000 units Opening parentage 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:
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