Marginal v/s Absorption costing

sajoz

Participant
Question: Last month opening inventory was 6000 units and the closing inventory was 4000 units. Using absorption costing this closing inventory was valued at $33,000. Using marginal costing last month’s profit was $50,000 and using absorption costing it was $41,000.

What was the variable production cost per unit last month?

| QUOTE EDIT | REPLYOctober 12, 2017 at 8:13 am

sajoz

Participant
I have tried this question above and below is my solution:
difference in profits is $9000. Therefore $9000 divided by the change in inventory which is 2000 units = $4.50 = fixed production cost per unit

inventory value $33000/4000 units = $8.25 = total production cost

So the variable production cost per unit should be $8.25 – $4.50 = $3.75

Somebody please confirm

Thank you.