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absorbtion marginal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › absorbtion marginal

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
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  • June 20, 2020 at 2:35 pm #574336
    ketki15
    Member
    • Topics: 60
    • Replies: 15
    • ☆☆

    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?

    June 20, 2020 at 5:58 pm #574358
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    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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