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Hello,
I need help in solving the 47th question from MA1 Specimen Exam, in Answers, only right option is available not solution.Question:
25,000 units of a company’s single product are produced in a period during which 28,000 units are sold. Opening inventory was 7,000 units. Unit costs of the product are:Direct costs $16.20/uint
Fixed production overhead $$7.60/unit
Fixed non-production overhead $2.90/unitWhat is the difference in profit between absorption and marginal costing?
A $22,800
B $30,400
C $31,500
D $42,000Thanks for your time.
Difference in inventory: 25000 vs 28000 ie a decrease of 3000
Multiply by fixed production overheads of $7.60
= A $22800
It’s important to note that the only difference between absorption and marginal costing profits is the inventory valuation ie the fixed overheads in the inventory.
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