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in the BPP textbook, one question requires to fulfil the blank:
‘……’costing fails to recognise the importance to working in the full capacity.
the correct answer is ‘marginal’ costing.
on this occasion, is there anyone could tell me why the answer is this rather than absorption costing. I think the marginal coasting can appreciate the cost at different level but full costing’s fixed cost part would not change in accordance with the activity level. Should I rethink for the fixed cost per unit for this question?
Thanks!
It is a ridiculous question for BPP to have asked (and is not really relevant for F5 anyway).
It can be interpreted in different ways and taken to apply to either marginal or absorption costing!!
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