Assignment Question(s):(Marks5)

Q1. Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following (2.5 marks)

1- There is no inventory.

2- There is beginning inventory.

3- There is end of period inventory

4- Explain and comment on the reasons for differences in the results

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