State how a cost unit differs from a cost centre.
State how a production cost centre differs from a service cost centre.
State what contribution means.
Prepare a budgeted profit statement for each of the two months, January and February, using marginal costing. Make sure opening and closing inventories are shown clearly in each month.
Calculate the production overhead absorption rate for each unit.
Prepare a budgeted profit statement for each of the two months, January and February, using absorption costing. Make sure opening and closing inventories are shown clearly in each month.
Reconcile the gap between the budgeted profit figures in parts (d) and (f).
Advise Miu whether she should change from marginal costing to absorption costing or not. Give reasons to support your answer.