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2. Traditional costing and absorption costing The two senior accountants of PumaSound Ltd, a specialist loudspeaker manufacturer, are debating the benefits of Variable Costing and
2. Traditional costing and absorption costing The two senior accountants of PumaSound Ltd, a specialist loudspeaker manufacturer, are debating the benefits of Variable Costing and Absorption costing. Bob Smith, who comes from a management accounting background, claims that the Variable Costing method is by far the best, whereas Bill Jones, who is a financial accountant, insists that Absorption Costing should always be used. They agree to a 2 month trial, where reports will be produced on both bases and compared. Production Overheads will be absorbed based on production units. Data available for January and February 20X3 is as follows. (Note that following very successful Christmas sales, there was no stock at the end of 20X2.) Bob and Bill agree the formats shown below to complete their calculations. Show the results that they would produce in EXCEL. Use rounding to simplify the presentation where required
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