Marginal Costing Versus Absorption Costing The MAIN DIFFERENCE is the treatment of FIXED COSTS. This treatment can produce different profit figures.The two methods of costing produce different profit levels dependent upon the net change in the level of stock during the period.This is due to the VALUATION of the net change in stock during the period. In [...] Over/(Under) Absorption Of Overheads In earlier articles‚ we discussed about absorption costing‚ its advantages and disadvantages and
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JOB COSTING JOB COSTING Cost object is a unit or multiple units of a distinct product or service called a job. Product or service is A single unit such as: 1.Specialised machine done at Hitachi. 2.A construction project managed by L & T. 3.Advertising campaign produced by Saatchi and Saatchi. Multiple identical unit such as: 1.Agni missile for Ministry of Defense manufactured by HAL. JOB COSTING SERVICE SECTOR JOB COSTING MERCHANDISING SECTOR - Audit engagements done - Special promotion of
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Marginal Costing Introduction The Cost of a product of comprises of materials‚ labour‚ and over heads. On the basis of variability they can be broadly classified as fixed and variable costs. Fixed costs are those costs which remain constant at all levels of production within a given period of time. In other words‚ a cost that does not change in total but become. Progressively smaller per unit when the volume of production increases is known as fixed cost. it is also called period cost eg. Rent
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Coffee Industry Industry Introduction From the discovery of small‚ brightly colored red berries on trees in Ethiopia came the largest imported commodity in the world‚ second only to oil. The coffee bean provides a livelihood for over 20 million people worldwide with an estimated worldwide retail sales expected to grow by a compounded rate of 6.9% from 2005-2010‚ reaching $48.2 billion by 2010‚ according to The U.S. Market for Coffee and Ready-to-Drink Coffee. [1] The two main species of coffee
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of Target Costing 1 1.2 Historical Background 2 1.3 Objectives of Target Costing 3 2 Target Costing Principles 4 2.1 Price Led Costing 4 2.2 Customer Focus 4 2.3 Design Focus 5 2.4 Cross-Functional Involvement 5 2.5 Life Cycle Cost 5 3 Distinguishing Target Costing from Traditional Cost Management 6 4 Setting up a Target Costing Management 8 4.1 Fundamental Work 8 4.2 Systems of Managing Target Costing 8 4.3 Principles of Target Costing 9 4.4 Procedures of Target Costing 9 4.5 Risk
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Absorption Costing Absorption costing is a method of costing that assigns a small percentage of production and overheads costs to the price of each product that is going to be sold. It accounts for all costs‚ direct and indirect‚ fixed and variable. For example; if 1000 products are made and the total costs are £10000 then each product would cost £10 before making a profit (10000/1000=10). Variable costs are costs that can be controlled by management or a sales worker. Whereas fixed costs are
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Process costing Process costing is a system which mostly practices by a company whereby the manager of the company wants to know the cash flow from one department to another. Process costing give a clarify information to managers‚ therefore this activities is very important. Process costing is consisting of three ingredients which are direct materials‚ direct labor and manufacturing overhead. Direct material is the raw material which needs to produce a product‚ for example rubber for shoes‚
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Activity-Based Costing ABC Company produces two products: Product A and Product B. Recently appointed management decided to change from a unit-based‚ traditional costing system to an activity-based costing system. The following data have been gathered‚ to assess the effect of the change: Product type Quantity Prime Costs Machine Hours Material Moves Setups Product A 60‚000 €150‚000 3‚500 6‚800 800 Product B 15‚000 € 30‚000 2‚750 1‚200 450 Expenditures (€) €180‚000 €120‚000
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MARGINAL COSTING Introduction Even a school-going student knows that profit is a balancing figure of sales over costs‚ i.e. Sales - Cost = Profit. This knowledge is not sufficient for management for discharging the functions of planning and control‚ etc. The cost is further divided according to its behavior‚ i.e.‚ fixed cost and variable cost. The age-old equation can be written as: Sales - Cost = Profit or Sales - (Fixed cost + Variable Cost) = Profit. The relevance of segregating costs
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Abstract Coffee is the third most popular beverage in the world after tea and water. However‚ the caffeine within coffee prevents some people from enjoying the strength‚ taste‚ and aroma that this beverage has to offer. In the past century‚ a new market for decaffeinated coffee has arisen‚ and the technology to develop this product has evolved. Over time‚ this technology has become more effective in removing a greater percentage of caffeine‚ while preserving more of the coffee’s flavour. Because
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