can someone help!? - PCR

GemmaLouise

The second section of PCR is pretty standard. Flexing the budget to the actual sales volume.
Sometimes the actual has closing stock and it asked for an operating statement using marginal costing. This is all fine

However, i believe the examiner could ask for it from marginal to absorption and there are no examples of this anywhere!?

How would it change. would you then have to show closing stock - i know with the marginal way u efectively get rid of the closing stock!!!!1

If anyone has the method to complete this type of question or can give me an example that would be much appreciated!!!


Thankyou - hope revision is goin well for everyone!

SandyHood

Gemma
Your question makes sense in a technical interpretation but not in terms of control or information for decision making.
We are often asked to re-write information that was originally prepared to assist the financial reporting process, so the absorption costing operating statement is one such report. When we present it as a marginal costing report we are taking the information forward, so we can usefully look back over the period of the accounts and try to make some sense of what has gone on.
To take a marginal report and then use it to produce an absorption costing report would be to move backwards in terms of reporting useful information for management control.

I don't expect to see this examined on the PCR paper.

GemmaLouise

thanks sandy - it was just that in my kaplan notes it does say that it could be asked the other way... but again there is no examples! But i see what you are saying! I will go on the hope that it wont crop up!!!!

Thankyou!