CIMA P1 Chapter 3 Test
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In question 2, this confused sue to the explanation in the lecture that stipulates that the FC is treated as a period cost for marginal costing. Therefore the profits should be lower for marginal costing and not higher as calculated in this example. Would it be possible to clarify?
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Hi, in question 4, according to the equation, increase total factory cost should lower its ratio right?
no, because when total factory cost increases: the conversion cost per hour increases(cost per factory hour);since TA ratio = Contribution (sales less material cost only) per hour/Conversion cost per hour (or cost per factory hour) .The impact would be reducing of TPAR
Hi – yes – Im sorry – you are correct Q2 should be answer d) Alpha, Gamma, Beta.
Ill get this changed asap.
I think the answer given is wrong the correct answer should be alpha gamma and betta
I mean for question nunumb 2
No. The marginal costing profit will be higher as there is a decrease in inventory levels so more fixed overheads r carried forward and matched against sale when they r sold resulting in lower absorption costing profit. Cl Inventory decreases, cost of sale increases and so profit decreases for absorption costing.