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Sir, I have a problem with absorptional and marginal costings.
When budgeting if we have used absorption costing we include fixed costs (whether general FC or Specific FC) in the production cost but if we have used marginal costing instead then we just take all the variable costs in the production cost (no fixed cost include).
BUT what is the purpose of using these costing methods and their effect on production cost?
It is up to the company to decide which method is more useful when making decisions about the business.
However little is asked about the merits of absorption and marginal costing in Paper PM because they were examined in detail in Paper MA.
If you have forgotten what you learned for Paper MA (or were exempt from Paper MA) then my free Paper MA lectures on marginal and absorption costing explain the benefits and reasons of each approach.
However, again, little is asked on this in Paper PM. My free Paper PM lectures cover everything needed to be able to pass the exam well.
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