- This topic has 1 reply, 2 voices, and was last updated 6 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Marginal costing
When adding the cost of contribution as in the example in the free notes, we added the variable selling cost of 1$ that represents the variable cost of selling one unit. However what I don’t understand is why do we multiply the variable selling price by 9000 at a later stage if we already added it up to the cost of contribution? If we were to multiply it by 9000 which I understand, then we shouldn’t we have added it to the contribution? Or am I being thick here.
Thank you for this great forum
You asked this as a comment on the lecture, and I answered you there.
The $1 is not anywhere added to the contribution. It is an extra cost and therefore reduces the contribution. It is multiplied by 9,000 because it is a variable selling cost and 9,000 units were sold.