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25,000 units of a company`s single product are produced in a period during which 28,000 units are sold. Opening inventory was 7,000 units. Unit costs of the product are:
Direct costs $16.20/unit
Fixed production overhead $7.60/unit
Fixed non-production overhead $2.90/unit
What is the difference in profit between absorption and marginal costing?
(a) $22,800
(b) $30,400
(c) $31,500
(d) $42,000
my answer is option b but correct answer is option a
please solve this questionClosing Inventory = Opening + Production – Sales
Closing inventory = 7000 + 25000 – 28000
Closing inventory = 4000Difference in profit = (Opening inventory – Closing inventory)*Fixed POH/unit
Difference in profit = (7000 – 4000)*$7.60
Difference in profit = $22,800@harmeen45 said:
thank u so muchYou are welcome 🙂
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