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Hi sir,
Should the question on standard costing or variance analysis include costs like rent, admin cost, advertisement cost under the header “fixed cost”, should we include admin cost and advertisement in the fixed cost calculation even though they are so called non-production costs?
Thank you.
Yes, they should be included because the question is about “Sales mix profit variance” not about “Sales mix contribution variance”, so all costs must be included.
goeswhatever: If you wish for me to answer you must ask in the Ask the Tutor Forum – this forum is for students to help each other.
(We only include production overheads in standard costing and variance analysis (if we are using absorption costing). I do suggest you watch my free lectures – they are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.)
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