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

- This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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- May 19, 2022 at 5:47 pm #656048
The following question is taken from the December 2012 exam paper.

A company uses a standard absorption costing system. The following figures are available for the last

accounting period in which actual profit was $108,000.

$

Sales volume profit variance 6,000 adverse

Sales price variance 5,000 favourable

Total variable cost variance 7,000 adverse

Fixed cost expenditure variance 3,000 favourable

Fixed cost volume variance 2,000 adverse

What was the standard profit for actual sales in the last accounting period?

A $101,000

B $107,000

C $109,000

D $115,000May 20, 2022 at 6:25 am #656057Please do not just type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.

The standard profit for the actual sales when adjusted for all the variances except for the sales volume variance gives the actual profit. Since we know the actual profit we can work ‘backwards’ using all the variances except for the sales volume variance to calculate the standard profit for the actual sales.

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