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I am really struggling with the above, especially calculating the absorption cost profit when given the information, it’s any question I come across, any advice?
Have you watched the free lectures on absorption and marginal costing?
If you have, and still have a problem, then you need to quote examples because all questions are slightly different 🙂
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the budgeted manufacturing cost of Product X are as follows: –
Direct Materials per unit : $24
Direct Labour per unit : $24
Fixed Production Costs: $20A supplier has offered to supply goods at a rate of $60. Should the company buy the product or continue making it.
Why are you expecting me to provide an answer?
Surely the book in which you found the question also has an answer – you should ask what part of the answer is causing you a problem!!
They will prefer to make it themselves because the marginal cost of production is cheaper than the cost of buying externally.
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