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F2 Chapter 9 Question 1

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › F2 Chapter 9 Question 1

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • October 29, 2015 at 4:00 pm #279540
    sano1987
    Member
    • Topics: 32
    • Replies: 15
    • ☆

    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.

    October 29, 2015 at 5:24 pm #279562
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    There 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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