Solution Library

Importance Of Marginal Costing In Decision Making Process

Question

Alpha Company, which sells specially designed envelopes has been in the industry for almost then years. The company’s profit and loss account for the month of December 2012 is given below:

Alpha Company
Profit and Loss Account for December 2012
                                                     €
Sales (21,500 units)                1720,000
Less: Variable Costs                   967500
                                             ________
Contribution                               752500
Less: Fixed Costs                        780000
                                              ________
Net Loss                                       27500

Describe and illustrate why marginal costing is considered to be better for decision making purposes that total absorption costing.


Summary

The question belongs to Finance and it discusses about a scenario of a business which yields a net loss. The importance of marginal costing in the process of decision making and total absorption costing has been discussed in the solution.

Total Word Count 78

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.