VARIABLE AND ABSORPTION COSTING

Tshilidzi Thathaisa
Mind Map by Tshilidzi Thathaisa, updated more than 1 year ago
Tshilidzi Thathaisa
Created by Tshilidzi Thathaisa over 6 years ago
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Description

This is a summary of the variable and absoption costing method.

Resource summary

VARIABLE AND ABSORPTION COSTING
  1. ABSORPTION COSTING
    1. FOR-external use
      1. http://youtu.be/Sy5BHS9b8-Y
    2. VARIABLE COSTING
      1. FOR internal use
        1. BENEFITS

          Annotations:

          • *profit is not maipulated *for decision-making in the short run AS ONLY vc are relevant *
      2. FACTS
        1. ALL PRODUCTION IS SOLD

          Annotations:

          •  profit for AC=VC
          1. SALES<PRODUCTION (CI)

            Annotations:

            • THENN AC&gt;VC PROFIT AS CI FIXED COSTS ARE DEFFERED
            1. SALES>PRODUCTION (OI)

              Annotations:

              • THEN PROFIT FOR AC&lt;VC
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