Menu
Costing
In marginal costing chp we have one sum wer we need to find out profit by way of absorption costing method n marginal costing method n reconcile it. In absorption costing..in case of fixed overheads..dat under/(over) absorption effects should it be given directly to fixed overheads (supplementary rate method) or to cost of sales? And if both methods are appropriate which one to follow wen? bcoz by both d methods profit will differ.
Replies (8)
Profit statement under Absorption costing system is as follows...1st find the net profit..call this as Profit before adjustment of absorption differences..then adjust under/over absorption of fixed overhead..and name final figure as profit.
There is always be difference in profit under two methods. Hope u knw the reasons for this. Later u have to reconcile that difference under two methods. Which method to follow and all, depends on type of the question asked in exam.
Else u can adjust in fixed overhead itself but u have to shown separately. Otherwise u can adjust that amount just before the profit.
It means either of both d ways we can do it na?
Yes, but they wil ask in which method to solve it.
M asking about d treatment of under absorption in absorption costing. Normally they don't specify in ques whether we need to do by supplementary rate method or give effect to adjust before profit
Give effect to adjust before profit.
Okay thank you so much
Recent Topic
- Total income less than 12 lakhs but after processi
- Is Getsvision Solutions right for SMTP bulk email
- Queries on Stock/ETF gifting.
- Adding bank account for the deceased for ITR refun
- SALE OF EQUITY ON THE LAST DAY OF THE FY 2024-25 N
- Which ITR form
- Form 103 id delayed for submission for more than 1
- Composition scheme
- Input tax credit under igst under insurance compan
- ITR Form to be used
Related Topics
CAclubindia
