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absorption cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › absorption cost

  • This topic has 7 replies, 3 voices, and was last updated 3 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • August 29, 2021 at 8:57 pm #633438
    sooha
    Participant
    • Topics: 62
    • Replies: 71
    • ☆☆

    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 ?

    August 29, 2021 at 9:08 pm #633441
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

    August 30, 2021 at 9:27 am #633493
    sooha
    Participant
    • Topics: 62
    • Replies: 71
    • ☆☆

    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..

    August 30, 2021 at 3:14 pm #633529
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    There isn’t enough information in the question. Which book did you find it in?

    September 2, 2021 at 1:19 pm #633974
    claire.giord18
    Participant
    • Topics: 7
    • Replies: 10
    • ☆

    I came across this question recently it goes like this

    production standard selling price 80/unit
    production standard contribution 18/unit

    sales volume 3600A
    if use absorption 2000A

    What is absorption cost/unit
    Ans are 8, 70, 52, 62

    Is it correct like this?

    absortion costing = standard selling price marginal costing = contribution so ignore

    so you do 3600 + 2000 division 80 = standard cost – correct?

    September 2, 2021 at 4:36 pm #634008
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

    September 4, 2021 at 7:14 pm #634337
    claire.giord18
    Participant
    • Topics: 7
    • Replies: 10
    • ☆

    Thank you for your clarification.

    September 5, 2021 at 9:53 am #634402
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • The topic ‘absorption cost’ is closed to new replies.

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