Give reasons for disagreeing or agreeing with them

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Question - Puppy Power Ltd produces 3 products as follows:

 

A

B

C

 

£

£

£

Sale Revenue per unit

20

30

40

Variable costs per unit

10

10

15

Allocated Fixed costs per unit

15

15

5

Profit per unit

(5)

5

20

1. Explain the term 'cost behaviour'.

It represents the resources used to achieve benefit. It include fixed costs and variable cost.

1. The assistant accountant has suggested that the product 'A' line be closed. Give reasons for disagreeing or agreeing with them. (Financial and qualitative factors should be considered).

2. Explain how fixed overheads are allocated to products when calculating the full cost of a unit/job.

3. Discuss any problems that can arise with the allocation of fixed costs to units.

4. What is the difference in use between marginal costing and traditional absorption costing?

Reference no: EM133173688

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