QUESTION 1 [20]

1.1 Explain the advantages variable costing might provide to a retail business experiencing increased demand compared to absorption costing. (2)

1.2. Explain the following costing terms: 1.2.1 Activity-Based Costing (ABC) (2) 1.2.2 Traditional Costing Method (2)

1.3. Evaluate how absorption costing might assist a retail business to profit from a new product line as compared to variable costing in a competitive market. (4)

1.4 Discuss the differences between fixed and variable costs in a retail setting (4)

1.5 Describe how management can make strategic decisions in a retail environment experiencing economic challenges such as high inflation and low employment levels using the following: 1.5.1 Variable costing (3) 1.5.2 Absorption Costing (3)