- This topic has 1 reply, 2 voices, and was last updated 1 year ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Absorption costing profit
Cost and selling prices for a product is given below :
Direct materials : $6/unit
Direct Labour : $7.50.unit
VOH : $2.50/unit
Fixed OH absorption rate : $5
Profit = 9
SP = $30/ unit
Budgeted production for month was 5000 units and the company produced 5800 units and sold 5200 units incurred FOH costs of $27400.
The question is to find marginal and absorption costing profit
Now I found the marginal profit to be $45400
Absorption costing profit is $48400
My question is when I do the reconciliation method of profit assuming I had marginal profit 45400
45400 – absorption profit = 600 units * $5
45400 – 3000 = Absorption profit which is 42400
I dont understand why I dont get the same answer with the reconciliation method
Please help 🙂
The inventory is increasing by 600 units and therefore the absorption profit will be higher than the marginal profit.
45,400 + 3,000 = 48,400.