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Assignment - Variable Costing Contribution Paper
Q1. Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following
-There is no inventory.
-There is beginning inventory.
-There is end of period inventory
-Explain and comment on the reasons for differences in the results
Q2. Define the master budget and use your own figures to prepare the following quarter budgets:
-Sales budget
-Production budget with ending inventory.
-Raw material budget with ending inventory.
-Direct labor budget
-Manufacturing overhead budget.
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