manufacturing business earlier this year and has been preparing management accounts using variable (marginal) costing. He has approached you as a Certified Chartered Management Accountant, to help his finance team prepare annual financial statements. As part of your discussions with the company’s finance team, you mentioned that you will use absorption costing to prepare the financial statements
Andrew Jarvis started his manufacturing business earlier this year and has been preparing
Draft a Report for Peter Cullen that:
a) Describes and explains the basis of variable (marginal) and absorption costing
systems.
b) Explains the effect on profit of using variable (marginal) and absorption costing.
c) Outlines TWO advantages and TWO disadvantages of both variable (marginal) AND absorption costing systems.
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