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Chapter 12: Absorption costing and...
Objectives
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When you have completed this chapter, you will be able to:
- appreciate the difference in rationale and cost classification underlying absorption and marginal costing;
- prepare profit statements using both marginal and absorption costing;
- explain the reason for differences in profit resulting from application of each of the two systems and reconcile such differences;
- adjust an absorption costing profit statement for over/underabsorbed overhead;
- apply marginal costing principles to decision-making scenarios;
- assess the relative strengths and weaknesses of marginal costing and absorption costing.
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