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company using marginal cost
if selling price is 80 per unit and contribution 18 and there was price adverse of 3600
and 2000 over absorption overhead,
what is the absorbing cost ,
how can i find it with these information ?I am not sure that I understand your question (there is no such term as an ‘absorbing cost’.
However you must have an answer in the same book in which you found the question, so ask me about whatever it is in the answer that you are not clear about.
sorry ! it is the profit under absorption cost / i need to find the fixed overhead to solve it but i couldn’t find it with these information >>
anyway sir thank you so much..
There isn’t enough information in the question. Which book did you find it in?
I came across this question recently it goes like this
production standard selling price 80/unit
production standard contribution 18/unitsales volume 3600A
if use absorption 2000AWhat is absorption cost/unit
Ans are 8, 70, 52, 62Is it correct like this?
absortion costing = standard selling price marginal costing = contribution so ignore
so you do 3600 + 2000 division 80 = standard cost – correct?
I assume that what the question says is the the sales volume variance is 3,600 adverse when using marginal costing, and is 2,000 adverse when using absorption costing.
If that fit the case then the difference between the actual volume and budget volume is 3,600/80 = 200 units.
Therefore the absorption profit per unit is 2,000/200 = $10.
Therefore the absorption cost per unit = 80 – 10 = $70 per unit.
I am afraid that what you have written at the end is completely wrong.
Have you watched my free lectures on variance analysis? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Also, why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers.
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