Write a report to the Welsh Assembly Government on the implications of the use of absorption costing in public sector organisations (1,800 words maximum) to:
1. Explain/ define the term “absorption costing”, identifying the key assumptions related to the calculation of product costs.
2. Critically evaluate absorption costing as a means of cost control, what do you consider to be the “strengths and weaknesses” of this approach to the management of an organisation’s costs?
3. Make appropriate recommendations to the Welsh Government as to whether it should continue using absorption costing in public sector organisations.
4. Based on your findings make a brief presentation on absorption costing, outlining the key point/ conclusions of your analysis.
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