COSTING METHODS
Ameer Abdullah, Darren Koettel, Frank Liebe, Virgil K. Powell
ACC/561
March 21, 2016
Dr. Jason Lee

Introduction
Although both methods have their own pros and cons Absorption and Variable Costing methods are what companies use to determine pricing for their products. Team B will analyze each of the methods and apply to a case study. Case Study The Polk Company already uses an absorption costing method to figure out its costs per unit and both an absorption and variable costing income statement. We decided to use the absorption method when it comes to this case. The absorption method is designed to let the managers of the company see all the costs that are needed for the manufacturing process and is absorbed by the company while doing the job that is needed.

Variable and Absorption Costing Each method is good for businesses because they both are designed to gain more profit for the company. The variable costing method is used mostly by managers and displays to them the pros and cons of the business. This method is helpful so you can see what area is excelling in the company and which area; you need to focus on a little bit more. The absorption method allows the company to see where it stands and where all manufacturing costs are included in their product. This allows the company to make a decision on where to set the price for their product.
Competitive advantage The best method when making a decision against a competitor would be absorption costing. Absorption costing better allots resource costs for a particular job or project. Since we are in competition for one project, management should understand the overall cost of the project rather than the cost of continuing operations.

Summary
After review of the case study and analysis of both costing methods Team B has determined that it would be better to use the