Short term decisions such as make or buy, acceptance of additional work, price setting, target profit etc. - marginal costing, main focus is marginal cost and contribution - marginal costing, used for short term decisions - marginal cost, does not consider overheads - marginal cost, not acceptable for year end financial statements - marginal cost, calculation of selling prices may be less accurate than other costing methods - marginal cost, production overheads are charged to production through an overhead absorption rate - absorption costing, budgeted overheads / budgeted labour hours or machine hours = budgeted OAR - absorption costing, appropriate for traditional industries - absorption costing, May not be appropriate where overheads are complex - absorption costing, identifies what causes overheads to be incurred for a particular activity - activity based costing, cost drivers are identified - activity based costing, more accurate calculation of selling prices because production overheads are analysed to the products which use the activities - activity based costing, appropriate for capital intensive industries where overheads are high and complex - activity based costing, cost drivers and cost pools need to be kept up to date - activity based costing,

Costing methods

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