Question A25 A manufacturing business uses a full costing system for budgeting, control and costing purposes. Over recent years there has been some significant changes within the business, which include: • The introduction of several new products which are made in different batch sizes • The new products are distinct and are made using a variety of different processes requiring different types of input • The manufacturing process has become increasingly automated • Direct labour has seen significant cuts and is now a small proportion of the overall production costs The business wishes to continue with a full costing approach but is concerned its traditional absorption costing system is not providing the level of detail required. What would be the most suitable costing system for the business to consider? A Marginal costing B Relevant costing C Lifecycle costing D Activity based costing
Question A25 A manufacturing business uses a full costing system for budgeting, control and costing purposes. Over recent years there has been some significant changes within the business, which include: • The introduction of several new products which are made in different batch sizes • The new products are distinct and are made using a variety of different processes requiring different types of input • The manufacturing process has become increasingly automated • Direct labour has seen significant cuts and is now a small proportion of the overall production costs The business wishes to continue with a full costing approach but is concerned its traditional absorption costing system is not providing the level of detail required. What would be the most suitable costing system for the business to consider? A Marginal costing B Relevant costing C Lifecycle costing D Activity based costing
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question A25
A manufacturing business uses a full costing system for budgeting, control and costing purposes.
Over recent years there has been some significant changes within the business, which include:
• The introduction of several new products which are made in different batch sizes
• The new products are distinct and are made using a variety of different processes requiring different types of input
• The manufacturing process has become increasingly automated
• Direct labour has seen significant cuts and is now a small proportion of the overall production costs
The business wishes to continue with a full costing approach but is concerned its traditional absorption costing system is not providing the level of detail required. What would be the most suitable costing system for the business to consider?
A
Marginal costing
B
Relevant costing
C
Lifecycle costing
D
Activity based costing
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