Only the overheads of closing go in the next period

and become the reason for different profits under absorption and marignal
costing system

its because the overheads absorbed in the opening and purchases are
already used
by the sales and the remaining, which is, closing inventory, is carried forward
in the next period
to be adjusted against the sales of next period. hence giving a hire profit in
current period.
under absorption costing system.
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If opening inventory is more than the closing, Marginal costing will report a
higher profit than absorptional costing. because of the nature of marignal,
only absorbing variable costs into the opening and production/purchased
units. Hence, giving us a lower cost of sales as compared to absorption
costing, which absorbes both variable and fixed overheads in the opening and
production/purchased units, making cost of sales bigger and hence leaving
with shorter gross profit.
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ABC =
Step 3: identify the factors which determines the size of the costs of an
activity.
Size of the cost ====> of an ======> ACTIVITY (eg. ordering)
and its factors will be (No. of orders) because it can give us what is the SIZE
of one order's cost.
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