Until recently, Pong and Mitchell (2006)
explored the impact of absorption costing as a basis
for product costing on the reported profi tability of
UK manufacturing companies from 1988 to 2002
by assessing the sensitivity of these companies’
net income to the adoption of the variable costing.
They found that the selection of absorption or
variable costing as a basis for product costing has
a potential important impact on UK manufacturing
companies’ profi tability. Foster and Baxendale
(2008) revisited the debate and examined whether