Hello John,
I see in your notes the following:
"Answers to test in chapter 9
1 C
Month 1: Production > Sales; Absorption costing profit > Marginal costing profit
Month 2: Sales > Production; Marginal costing profit > absorption costing profit
A and C satisfy Month 1, C and D satisfy Month 2. Therefore C satisfies both."
Could you please explain this "Production > Sales; Absorption costing profit > Marginal costing profit"
Does it mean that If Production is higher than Sales then Absorption costing profit will be higher than Marginal costing profit?
I cannot find any explanation in your notes.
Thank you.
Ask the Tutor ACCA MA
F2 Chapter 9 Question 1
10y ago#1There is no point at all in using the notes on their own. They are Lecture Notes, and you need to use them while watching the lectures - it is in the lectures that we work through the examples and expand and explain.
If you are not watching the lectures then you must buy a Study Text from one of the ACCA approved publishers.
If production is higher than sales, then inventory will increase. If inventory increases then absorption costing will give a higher profit than marginal costing.
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