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somebody help me out with this;in a period were opening inventory was 5000units and closing inventory was 3000 units,a company had a profit of $92000 using absorption costing.if the fixed overhead absorption rate was $9 per unit,calculate the profit using marginal costing.
Opening < closing
5000 < 3000
PUM=PUA+FOH/unit x change in stock
where PUM= profit under marginal
PUA= profit under absorption
FOH/unit Fixed overhead/unit
change in stock= difference between opening and closing
so,
PUM=92000+9×2000
92000+18000
110000
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if inventory level have gone down then absorption costing profit will be less than the marginal costing and vice versa. the difference btw opening and closing is 2000 as sales so this will be 2000×9=180000+92000 as the profit in absoption=110000
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