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The company has sold 50,000 units and produced 55,000 units in the last month and uses absorption costing method for costing purposes. Budgeted production cost under absorption costing method is calculated as Rs. 250,000 whereas budgeted fixed overheads were Rs. 120,000.
What is the budgeted profit if company uses marginal costing method in place of absorption costing?Thanks in advance!
Please do not simply set me a question to do – presumably you have an answer anyway in the same book as the question! Say what your problem is and then I will try and help.
You have either not copied the question correctly or you have missed out some of the question, because there is not enough information given to arrive at an answer.
The difference between absorption and marginal profits is the change in inventory multiplied by the fixed overheads per unit.
Here, the change in inventory is 5,000 units (they produced more than they sold).
The free lectures on this will help you.
Dear Tutor, I don’t have the answers, unfortunately I have only the questions. So i try to solve these problems. In this case really i also thought that there are some conditions which are missing, so I decided to adjust this problem with you!
Thank you very much
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