Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › absorption and marginal costing
- This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
- AuthorPosts
- March 8, 2017 at 5:34 pm #376670
Hi sir can you please explain the concept of answer for this question.
A company has the following budgeted cost and revenue:
Sale price -50
variable production cost-18
fixed production cost -10In the most recent period 2000 units were produced and 1000 units were sold.
Actual sale price, variable production cost per unit and total fixed production cost were all as budgeted. Fixed production costs were over observed by 4000. There was no opening inventory for the period.What would be the reduction in profit for the period if the company has used marginal costing rather than absorption costing.
Thank you
Kamal BishtMarch 8, 2017 at 6:52 pm #376773Why on earth are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they contain exam standard questions together with answers and explanations.
You really should watch my free lectures!!!
If you had, then you would know that the only difference in the profits is the change in inventory multiplied by the fixed costs per unit.
The inventory is increasing by 2000 – 1000 = 1000 units.
The fixed costs are 10 per units. Therefore the profit will be different by 1000 x 10 = $10000.
I do suggest you watch my lectures – they are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
- AuthorPosts
- The topic ‘absorption and marginal costing’ is closed to new replies.