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we have been given abs costing profit as 80000
prodn as 120000 and sales as 100000
budgeted fix cost is 300000
marginal costing?should we add 80000 to 50000 or substract?
how should we decide for the same?As I explain in my free lectures, if inventory increases over the period then absorption costing gives the higher profit. If inventory decreases over the period then marginal gives the higher profit.
Here they produce more than then sell and so inventory is increasing.I have no idea where you have got 50,000 from – there is not enough information in what you have typed to be able to calculate 50,000.
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