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The following budgeted information relates to a manufacturing company for next period:
Production 14,000 Fixed production costs 63,000
Sales 12,000 Fixed selling costs 12,000
The normal level of activity is 14,000 units per period.
Using absorption costing the profit for next period has been calculated as $36,000.
What would the profit for next period be using marginal costing?
sir i have solved this question but the problem is this that in this question we have closing inv less the opp so if its less the marginal costing profit should be greater thn absorption i understood it like this by looking at the sale and the production please explain me
Since sales are less than production, the inventory will have increased and therefore marginal profit will be less than absorption profit.