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absorption costing

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

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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  • December 27, 2016 at 4:04 pm #364540
    ryan32
    Member
    • Topics: 35
    • Replies: 64
    • ☆☆

    the changes in inventory level cause differences in profit as per marginal and absorption costing cause of overhead absorbed into the units.

    in question only one o/h absorption rate is given. So are we assuming that the opening inventory that have been produced last year have absorbed the o/h at the same rate as that in the current year cause its very much possible to have different o/h absorption rate in the previous year by which the units have absorbed.

    December 27, 2016 at 8:49 pm #364561
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54755
    • ☆☆☆☆☆

    It is possible in practice that there is a change in the absorption rate, but in the exam always the absorption rate will stay the same. (But you should anyway be able to realise yourself what the effect would be 🙂 )

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