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Question 2: Variable costing and Service department cost allocations (22 marks) Part A (Variable Costing) 'In absorption costing, all manufacturing costs, both fixed and variable, are assigned to product cost. This is contrasted with variable costing, in which fixed manufacturing costs are not absorbed by the product. Advocates promote absorption costing because fixed manufacturing costs provide future benefits. However, absorption costing can encourage managers to engagen behaviour that is harmful to the organisation'. Required: Question 2.1 Discuss the above statement explaining: (a) Key features of both methods. b) Why and when absorption costing method is used. (c) How absorption costing encourages managers to engage in behaviour that is harmful to the organisation (Word limit: 400 words. Show the word count at the end of your answer] (10 marks) Your Answer (expand the space as required): 2 tt t Word count