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Question 3: Allocated Mark: ( 10 ) Absorption costing, sometimes known as total absorption costing, is the basis of all conventional financial accounting statements. Marginal

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Question 3: Allocated Mark: ( 10 ) Absorption costing, sometimes known as total absorption costing, is the basis of all conventional financial accounting statements. Marginal costing distinguishes between fixed costs and variable costs as conventionally classified. In one month, a company produced and sold 20,000 units of a product. Costs and revenues were as follows: BD Sales 100,000 Variable production costs: 35,000 Fixed production costs 15,000 Variable administrative and Selling overheads 25,000 Required: (a) Prepare operating statements based on both absorption and marginal costing to illustrate the characteristics of these approaches. (6 Marks) (b) Explain the key differences between marginal costing and full absorption costing (4 Marks)

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