Hubble is a recruitment and management consultancy with based in both UK and Europe. The company provides both basic training and recruitment for junior administrative staffs and management consultancy at senior and strategic level. Hubble has recently entered the continental European market, with the senior management taking full responsibility and running of the company. This budget proposal will provide senior management with the required tools and data , to discuss the performance of the two divisions (Recruitment and Management Consultancy ) in relation to their new venture into Europe and with their competitors. The decision making value of full and marginal costing and suggest which one is the best solution, supporting your points with arguments
Full or absorption costing
Full costing: focus on the theory of direct and indirect costs of an organization. Costing of an organisation is either direct. A direct cost refers to cost that can clearly traced to a specific activity or output. Full cost can also be defined as the overall amount of cost incurred by Hubble recruitiment and consultancy unit divided by the number of customer serviced. Full costs will be split into indirect and direct cost. Marginal costing or contribution costing
Contribution costing split the production or services costing both direct and indirect between fixed and variable. Variable costs can be define as those that change with the volume of goods or services produced, and fixed costs as those that remain constant regardless of the level produced If fixed costs are high, more units of products or services need to be generated in order to keep unit costs down, taking advantage of economies of scale; this is because, with a lower level of activity, the fixed costs are being spread over a smaller number of units. In relation to the Hubble company taking into account that the company has two separate units, the most...