A company manufactures and sells a single product. In two consecutive months the following levels of production and sales (in units) occurred:
Month 1 Month 2
Sales 2,600 3,400
Production 2,700 3,200
Profits or losses have been calculated for each month using both absorption and marginal costing principles.
4. Which of the following combinations of profit/(loss) for the two months is consistent with the above data?
Absorption costing Marginal costing
Month 1 Month 2 Month 1 Month 2
$ $ $ $
A. 200 3,400 (400) 2,200
B. (400) 3,400 200 2,200
C. 200 2,200 (400) 3,400
D. (400) 2,200 200 3,400
in what basis do they calculate absorbtion costing> marginal costing in month 1
and marginal is >absorption costing in month 2
so how do we find the answer as option c 200 -2200 and (400)-3400 how to calculate this
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absorption and marginal costing
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