significant differences in profits. She argued that managers should focus on the same profit measure that financial markets use to evaluate the company. Finally, she drew attention to the fact that although the net profit in August was higher with the variable costing system if the profits for July an August were added together the absorption costing system showed the higher profits. At this point it became apparent that the decision was more complex than originally envisaged. Ower therefore asked the Vaughan and the financial director to produce a report for the next meeting that would identify all of the issues involved relating to using variable or absorption costing for internal reporting