C. Jones & Co. have traditionally used an absorption costing approach to valuing stocks in their final

Question:

C. Jones & Co. have traditionally used an absorption costing approach to valuing stocks in their final accounts. The firm’s accountant wishes to assess the differences, if any, that the use of a marginal approach might have produced.

Opening stock on 1 January 19_3 was 700 units valued at £12 000; this figure is to be used for both methods.

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You are asked to:

(a) Draw up the manufacturing and trading accounts for 19_3 and 19-4 adopting each method, and

(b) Use your answer to explain why the profits are different under each method.

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Costing And Management

ISBN: 9780198328230

2nd Edition

Authors: Riad Izhar, Janet Hontoir

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