Business, 19.01.2021 14:00 shannynichole

Prepare a short report containing an evaluation of both the absorption costing system and the relevant costing system

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Answer from: mlopezmanny5722

Short report on the evaluation of Absorption Costing and Relevant Costing

FROM : Accounting Student

TO : Accountant

DATE : Tuesday 19 January 2021

RE : Evaluation of Absorption Costing and Relevant Costing

1. Product Cost :

Absorption Costing = Variable manufacturing costs + Fixed manufacturing costs

Relevant Costing = Variable manufacturing costs only

2. Period Costs :

Absorption Costing = All Non- Manufacturing Costs

Relevant Costing = All Non- Manufacturing Costs + Fixed Manufacturing Costs

3. Gross Profit / Contribution

Absorption Costing = Calculates Gross Profit (Sales - Production Costs)

Relevant Costing = All Non- Manufacturing Costs + Fixed Manufacturing Costs

Signed

Accounting Student

Date 1/19/2021

Explanation:

Absorption costing is also known as full costing. All manufacturing costs are included in the Product Cost. This is most suitable for external reporting and acceptable for IFRS and GAAP.

Relevant costing is also known as Direct or Variable costing. Only Variable manufacturing costs are included in Product Costs. This costing method is for internal purposes and is used by Managers for decision making.

Answer from: Quest

the answer is a.

by: nicholas dooley

Answer from: Quest

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.

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Prepare a short report containing an evaluation of both the absorption costing system and the releva...

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