I did not think the overhead absorption rate would be used for marginal costing. Why are we using it?
K
Keaobaka Martha Thebe·
No worries. I was able to figure it out. Fixed costs are not stated as a round figure but per unit based on production!
Initially, I had thought that the 12000 were the number of units the AR was calculated based upon.
T
twizahnanks·
where is the closing inventory of 1500coming from
A
Arnaud·
That's the difference between the amount produced and the amount sold-13,500 units were produced but 12,000 units sold-the difference between the 2 is 1,500
Z
Za·
Hi, please can you help me with this query.
Regarding the below formula, I thought MC don't include fixed overheads? In that case why are we adding it to opening inventory?
AC Profit
add: fixed overhead in opening inventory
less: fixed overhead in closing inventory
MC profit
Initially, I had thought that the 12000 were the number of units the AR was calculated based upon.
Regarding the below formula, I thought MC don't include fixed overheads? In that case why are we adding it to opening inventory?
AC Profit
add: fixed overhead in opening inventory
less: fixed overhead in closing inventory
MC profit