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Hi,
Trying to get around this question from ACCA CBE Demostration:The following budgeted information relates to manufactoring company for next period:
Units $
Production 14,000 Fixed Production Cost 63,000
Sales 12,000 Fixed Selling Cost 12,000The normal acticity is 14000 units per period. Using Absorption Costing the profit for the next period has been calculated as $36,000
What would be the profit for the next period using Marginal Costing?
Calculated by contribution way or different in profit? I’m confused 🙁
Can anyone help?
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Hi,
In this question you will get the answer by calculating the difference in profit.
but first need to find the OAR= budgeted overhead / budgeted activity level
that is: 63000/14000 = $4.5then find the closing inventory that is 14000-12000=2000
2000×4.5= 9000
then take the absorption costing profit 36000-9000=27000
27000 is the marginal costing profitHi Zeba,
Thanks so much for answering the question really appreciated 🙂
I wasn’t sure of calculating the closing inventory but everything is clear now!!!Thanks!!!!! You wont mind answering another question I have on Calculating the Present Value of Cash Flows?
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You are welcome croki.
Ya sure give me your question i will try solving.
Hi Zeba,
I was looking every other hour for your answer 🙂 and yes you did so pleased! My name is Ismari (croki11 is just my username) F2 will be my first ACCA exam already have AAT Level 3 but ACCA didn’t gave me any exemptions:-( from Knowledge level.
Is this your first exam?- Topics: 0
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hi ismari,
Yes this is my first Paper of ACCA.
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