Reporting of financial performance in variable costing with lifo inventory method and its practice on dividend decisions

Production cost consists of direct material, direct labour and overheads. Direct costs on the product can be directly, measured on quantity basis. Indirect costs on the product cannot be measured. Direct costs are variable costs and they increase while production level increasing, decrease while production level decreasing. Indirect cost are semi-variable costs. Since including fixed costs in production cost effects finished goods stocks, it increases profit for the period. Another factor affecting period for the period is inventory valuation method. Profit distribution means provision for tax, dividend to be paid and reserve to be kept. Tax is calculated according to fiscal legislation. Dividend and reserve are subject to general assembly minute within commercial code and article of association. The study discusses how to utilize cost calculate and inventory valuation methods while making decision on dividend and submit a proposal.