• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

inventory

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › inventory

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 11, 2021 at 8:14 am #637428
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    sir whats the reason for when the inventory levels being increased the profits are also increasing ?
    is it because the cost of sales are low ?

    October 11, 2021 at 9:12 am #637438
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    That is only the case when we are using absorption costing.

    Because the unit cost includes the absorption of fixed overheads, the more that are produced then the lower the cost per unit and hence the greater the profit. That is fine is they are selling all their production, but if they are producing more than they sell then inventories will increase. Again, this is not really a problem if they sell the inventory in the next period, but there is a problem if the keep increasing the inventory because they might end up never being able to sell it.

    October 11, 2021 at 9:49 am #637440
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    so in a way having more inventories is bad eventhough profits will increase when calulations are done

    October 11, 2021 at 3:37 pm #637457
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    A company should really only increase inventory if they are expecting to sell more.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • afital12 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • afital12 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy