Forums › ACCA Forums › General ACCA Forums › ABSORPTION COSTING
- This topic has 4 replies, 3 voices, and was last updated 11 years ago by Pinky.
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- August 31, 2013 at 1:17 pm #139391
A Co. uses standard absorption costing. Its fixed OH absorption rate is $ 8 per machine hour and each unit of production should take 3 machine hours.
Last year there was an opening inventory of finished goods of 4,000 units, they produced 30,000 units and sold 25,000 units.
The actual profit last year was $ 526,000.
I got answer $ 486,000 but it is not part of 4 options.
Please help me to find where I am wrong…..
August 31, 2013 at 1:25 pm #139393You forgot to mention the selling price per unit.
Can you give the whole question please
many thanks
Shaun.September 1, 2013 at 7:29 pm #139446I am guessing that maybe the question was what was the profit using marginal costing?
If it was then the correct answer is $406,000.
(because the inventory increased by 5000 units and each unit has fixed overheads of $24 (8 x 3). So the marginal profit is lower by 5,000 units x $24.)September 4, 2013 at 3:00 pm #139824HI John
Again Thanks!
I got 5,000 units as difference in inventory but rather than multiplying by $24 I was multiplying by $8 and that’s reason i didn’t get correct answer.
I think I am making silly mistakes.
September 4, 2013 at 3:01 pm #139825HI Shaun
It is profit using marginal costing. So there is no selling price.
thanks!
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