Income effects alternative cost accumulation systems
8 important questions on Income effects alternative cost accumulation systems
Stock quantity decreases
Arguments in support of absorption costing:
- Avoids fictuous losses
- fixed overheads are essential for production
- theoretically superior to variable costing
- consistency with external reporting
Volatile sales and changing stock levels favours?
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Seasonal sales where stock are built up in advance favour?
The average planned usage of capacity for the long run
From what can the cost of rational capacity be recovered?
For what can the choice of a denominator be of crucial importance?
- Pricing decisions
- cost of unused capacity
Kaplan's death spiral:
- Higher prices
- lower sales
- lower production
- higher cost price
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