Contrast and Compare Absorption Costing with Marginal Costing Essay

Contrast and Compare Absorption Costing with Marginal Costing - Essay Example The Strict adherence to a particular costing method is critically important to effectively managing the finance in a firm since its management will be bale to make proper appraisal of the productivity as well as performance of various costs units in the firm. This piece of research reviews full costing and variable costing and outlines the conceptual framework and key assumptions of these cost methods. This paper compares and contrasts these approaches to product and services costing with a view to explain whether the choice of full costing or variable costing still matter or not. Full Costing: Conceptual Framework and key assumptions Full costing, also commonly termed as Absorption Costing, refers to a costing method in which all manufacturing costs, including variable as well as fixed costs, are attributed to the production costs. Hilton, Maher and Selto (200, p. 58) stated that full costing applies all manufacturing-overheads to manufactured goods along with direct materials and d irect labor costs. Full costing is also termed as absorption costing because it absorbs and recovers both fixed and variable costs (Heisinger, 2009, p. 276). The cost incurred for the production of a unit is considered as variable cost per unit plus an allocated share of the fixed overheads (Jawahar-Lal, 2008, p. 627, Nigam, Nigam and Jain, 2004, p. 398). In full costing, direct costs are directly allocated to the cost units and manufacturing overhead-costs are taken to the product and other overheads. Direct material costs and direct labor costs are variable costs and these are directly attributed to the product. But, fixed costs are charged over different products that the firm manufactures over a given period of time (Williams, Haka and Bettner, 2004, p. 923, Jiambalvo, 2009, p. 181). Inventory costs should include all production overheads with fixed as well as variable costs and therefore SSAP 9 considers Full Costing as an essential requirement for the external reporting purpos es if the firm has to undergo it (Broadbent, Broadbent and Cullen, 2003, p. 92). In Full Costing method, the demand of the product is never considered, but prices are considered as the functions of the costs. Full costing includes pasts costs that may not always be relevant to the present decision making purposes and pricing determinants (Jackson, Sawyers and Jenkins, 2008, p. 228, Drury. 2006, p. 227) In Full Costing method, the demand of the product is never considered, but prices are considered as the functions of the costs. Full costing includes pasts costs that may not always be relevant to the present decision making purposes and pricing determinants. It is therefore criticized that Full costing may not be able to provide reliable and accurate information in order to make decision making be effective (Boardguess, 2009). Variable Costing: Conceptual Framework and key assumptions As detailed above, Full costing includes direct materials, direct labors and both variable and fixed manufacturing overheads that are incurred in manufacturing a product. In contrast, variable costing doesn’

Radon Indoor Air pollution Term Paper Example | Topics and Well Written Essays - 1250 words

Radon Indoor Air pollution - Term Paper Example Is it really possible to develop a fatal disease, such as cancer, just by inhaling air indoors? It is sad to say, but this is in fact true. According to the World Health Organization (WHO), low indoor air quality within buildings and houses is especially dangerous to an individual’s health, with radon being determined as the leading pollutant that can cause lung cancer (Neira, et al., 2009, p. ix). Although the radioactive nature of radon and its harmful effects to people have drawn attention since 1979 and it has been formally labeled as a human carcinogen in 1988, â€Å"a unified approach to controlling radon exposures† to manage health risks was enacted just in the year 1993 (Neira, et al., 2009, p. ix). Radon research has taken thirteen years to be quantified and be made official for the WHO to establish the International Radon Project, which, based on solid and indisputable data, aims to create and increase public and political awareness against the destructive effects of continued radon exposure indoors (Neira, et al., 2009, p. ix). This year, the International Radon Project has gained much ground in raising awareness of the seriousness of the issue and radon testing has slowly evolved into a necessity for many American businesses and homeowners. Indeed, creating and maintaining high indoor air quality has become a requirement for many states in the U.S. But what really is radon; how is it radioactive; and how can it cause cancer? These are just some of the questions that this paper will answer in the hopes of providing an understandable and clear discussion of radon indoor air pollution. Radon (222Rn) is formed when the element radium (226Ra) decays (Otton, Gundersen and Schumann, 1995). Radium is produced when uranium (238U), a naturally radioactive element, decomposes (Otton, Gundersen and Schumann, 1995; Neira, et al., 2009, p. 1). Both radium and