Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Absorption Costing & Marginal Costing
- This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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- February 22, 2021 at 3:17 pm #611320
Dear Tutor,
Pls advise me.
If a question gives you 3 income statements (Actual cost, Absorption cost & Marginal cost) with different net profit & they ask us to reconcile those statememts.
Are these formulas correct or not, in finding the variances?Marginal cost – Absorption cost = Volume cost variance
Marginal cost – Actual cost = Expenditure cost variance
Marginal profit – Absorption profit = Stock reduction cost variance
Actual profit – Absorption profit = Closing stock cost variance
Thank you.
February 22, 2021 at 5:19 pm #611346You must not learn these things as formulas.
The first two do not really make too much sense because we analyse all of the variances.
Also, there are no such things for Paper PM as ‘stock reduction cost variance’ and ‘closing stock cost variance’.
On the assumption that you are preparing for Paper PM then I suggest that you watch my free lectures on variances (and also appreciate that Paper PM mostly concentrates on the advanced variances rather than the basic Paper MA variances).
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