- This topic has 1 reply, 2 voices, and was last updated 9 years ago by
.
- Posts
A company produces and sells a single product whose variable cost is $6 per unit.
Fixed costs have been absorbed over the normal level of activity of 200,000 units and have been calculated as $2 per unit.
The current selling price is $10 per unit.
How much profit is made under marginal costing if the company sells 250,000 units?
A $500,000
B $600,000
C $900,000
D $1,000,000
Hi, sir I have a question, why the total fixed cost= 2*250000 is incorrectBecause fixed overheads in total should remain fixed (by definition). So since they have been budgeted as being 200,000 x $2 = $400,000 then they should remain at $400,000 regardless of how many units are actually produced.
I do suggest that you watch our free lectures. Our free lectures cover everything needed to be able to pass Paper F2 well.
- You must be logged in to reply to this topic.