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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › profits/losses using absorption and marginal costing
a company manufactures and sells a single product. In two consecutive months the following levels of production and sales (in unit) occurred:
month 1 month 2
sales 3,800 4,400
production 3,900 4,200
opening inventory for month 1 was 400 units. Profits or losses have been calculated for each other month using both absorption and marginal costing principles
which of the following combinations of profits and losses for the two is consistent with the above data?
ANSWER:
absorption costing profits/ losses marginal costing profit/ losses
month 1 month 2 month 1 month 2
$ $ $ $
200 3200 (400) 4400
please kindly explain, how to come up with this answer
Thank you.
