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hi
1) so if a question is asking me for payback period, do i use the discounted pay back or the one with cashflows that have not been discounted2) one of the question in the practice tests asked me to calculate total cost but it did not specify if its total cost using absorption or marginal, how do i go about it
3)Question, a company uses standard marginal costing. last month the standard contribution on actual sales was 10 000 and the following variances arose
i.total variable costs variance 2000adv
ii.sales price variance 500fav
iii.sales volume variance 1000advwhat is the actual contribution for the month?
please help be answer this question and explain to me the variances that i take account of and why.
sorry this is pretty lengthy1. If the question just asks for the payback period then you do not discount. If it wants the discounted payback period then it will ask for it specifically.
2. Total cost means absorption cost 🙂
3. Because the question gave the standard contribution for the actual sales (not the budgeted sales) the sale value variance is not relevant. The other two variances will make the actual contribution different.
I hope that you are watching my free lectures. They are a complete free course for Paper F2 🙂
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