Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs.
And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.
Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs.
And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.
Target costing is when you have a goal for the project and its costs. Absorption costing is when you need to fix the excess spending.
Full costing system
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
absorption costing
to calculate the profit easilly
full absorption costing
Target costing is when you have a goal for the project and its costs. Absorption costing is when you need to fix the excess spending.
Full costing system
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
absorption costing
to calculate the profit easilly
It is old costing technique & it is replaced by activity based costing
An activity-based absorption costing system defines the cost by how many activities a product unit uses. A traditional absorption costing system defines the cost by how much money went into making the product unit.
= http://wiki.answers.com/Q/Marginal_costing_and_absorption_costing_which_is_favourable" =
An absorption costing is an accounting method used to calculate the total cost of a product by factoring in both direct and indirect costs.
to undersrand
there is have some differeance . 1.