Sir when making the operating statement on absorption costing basis, then the budgeted profit figure that we start with, will only be net off sales minus Prime cost, variable and fixed production overheads only, right? The budgeted profit will not take into account fixed and variable non-production overheads, right?
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Absorption costing
6y ago#1Although we first do calculate the sales less the cost of goods sold (which includes all production costs), we then deduct all non-production cost from that figure to get the final budgeted profit.
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