The Management Accountant’s Profit Statement – Marginal Costing – ACCA Management Accounting (MA)
Reader Interactions
Comments
Leave a Reply
You must be logged in to post a comment.
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
20% off ACCA & CIMA Books
OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>
Hello, using the full profit statement gave me an incorrect answer. please help rectify where i was wrong
this is how i went by it; $ $
sales(11500*35) 402500
less: cost of sales
Production(9,500)
Material 11,4000
Labour 76000
Variable 47500
9500*25 *237500*
closing inventory (2000*25) (50,000)
( 189500)
213000
less: variable cost
variable selling cost ( 1 *11500)
( 11500)
201500
Less: fixed cost
Production (20,000)
Selling cost (2000) (22000)
Profit 179500
I think it is to be like FIFO LIFO methods, it needed yo count always the same way, if marginal-always mardginal and the other method same. Am I right?
Yes – you are correct
In absorbtion way I think it is not right way, because we put fixed cost to closing inventory, and don’t count it to sales of the month, but it is a fixed cost, it is considered to be occured every month, isn’t it?
how marginal cost equals 59000
how it possible to get absorption higher profit while production greather than sales
thankz
This is explained (with examples) in the lectures working through Chapter 10 of our free lecture notes.
while preparing the final profit statement at the end of the month using absorption costing, why do we charge fixed production overheads for the actual units produced at standard cost per unit? why do we not just write the actual fixed overheads of the month directly? if we write the actual amount for the month directly, we won’t have to do any adjustments later. and also, doesn’t it seem wrong to charge the units actually produced during the month with the budgeted fixed overhead cost per unit (in the final profit statement at the end of the month)
The final profit statements use financial accounting rules. The management accounting profit statements are not the same and companies can do whatever they find more useful for decision making. (And, of course, you cannot be asked to produce a full profit statement in the Paper MA exam, even though you must understand the principles).