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Marginal costing profit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Marginal costing profit

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 17, 2017 at 4:38 pm #393387
    khooshboo
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    The standard cost card and selling price details for product Alpha are as follows:
    ($/unit)
    Direct materials : 8$
    Direct labour: 8.50 $
    Variable overhead: 3.50 $
    Fixed overhead absorption rate : 4 $
    Total costs = 24 $
    Profit= 11$
    Selling price= 35$

    You are also given the following information at the month end:
    Budgeted production for the month: 4000 units
    Actual production for the month : 6500 units
    Actual sales for the month : 8100 units
    Fixed overhead costs : $30000
    All other unit costs and revenues are as budgeted.
    Calculate the marginal costing profit for the month.

    Sir, i tried the contribution/unit method where total variable costs = 20$ , selling price = 35$ ..which makes 15 $ contribution
    Total contribution= 8100* 15= 121500$

    Then marginal costing profit i calculated by deducting the overheads of 30000 $ from the contribution which makes 91 500$..

    But the thing is that there is a decrease in inventory of 1600 units..i cant arrive to the answer of 61500 $..please sir could u explain where i went wrong 🙁

    June 18, 2017 at 7:30 am #393418
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    Assuming that you have typed the question correctly, then the profit is 91,500.

    It seems there must be a typing error in your book – the change in the inventory level does not affect it.

    June 18, 2017 at 9:01 am #393424
    khooshboo
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    Thanks a lot sir!! 🙂

    I think there should have been a mistake.

    June 18, 2017 at 4:56 pm #393437
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Marginal costing profit’ is closed to new replies.

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