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Glossop Limited reported an annual profit of Rs 47,500.
The company uses absorption costing.
The opening inventory was 400 units and the closing was 600 units.
OAR is Rs 12 per unit.
What would be the profit under marginal costing?I am new to the forum. Can anyone please guide where the lectures or study notes are related to cost accounting? Specifically related to MCQs with inventory information.
For cost accounting the paper you need is MA see:
https://opentuition.com/acca/ma/
If that’s too advanced try MA1 and MA 2 here:
Your question is not related to BT, but I will answer it anyhow.
Inventory has increased by 200 units. Under absorption costing the additional 200 units will ‘contain’ fixed costs of 200 x 12 = 2400. Under marginal costing fixed costs are written off as incurred, not included in inventory. So when going from absorption costing to marginal costing an additional 2400 would be written off to P&L, reducing the profit to 45,100.
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