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A company manufactures and sells a single product. Next year the budgeted total fixed production costs are $480,000, budgeted sales are 24,000 units and budgeted production is 25,000 units. The budgeted profit for next year using absorption costing principles is $57,500.
What is the budgeted profit for next year using marginal costing principles?
sir the inventory is decreasing so marginal profit should be more isnt it?
but on acca exam paper it’s different.
so answer should be 76600ans
Budgeted fixed production cost per unit = $19.2 (480,000 / 25,000)Marginal costing profit = $38,300 (57,500 – (25,000 – 24,000) x 19.2)
The inventory is increasing!!! They produce 1,000 units more then they sell.
Therefore the marginal costing profit is lower.
but sir they produced 25000 and sold 24000 so that means inventory is decreasing? how do we know which one is opening inventory and closing.
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