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Marginal costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Marginal costing

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • October 3, 2018 at 6:01 pm #476282
    aymzaman
    Member
    • Topics: 2
    • Replies: 0
    • ☆

    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

    October 4, 2018 at 7:33 am #476321
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

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