Question 1 Introduction
The costing method which most helps with decision-making in a business is absorption costing.
Examples of cost units are a unit of production from a factory, such as a car, and a unit of service, such as a passenger-mile on a bus.
Cost centres are sections of a business to which costs can be charged in order to assist with control of the business.
Absorption costing absorbs the total costs of the whole business amongst the cost units that the business produces.
In order to comply with IAS 2, Inventories, a business will use marginal costing to calculate the value of its closing inventory.
The costing method which most helps with decision-making in a business is absorption costing.
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