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A company uses standard absorption costing. Its fixed overhead absorption rate is £8 per machine hr and each unit of production take 3 machine hrs.
Last year was an opening inventory of finished good of 4,000 units. They produced 30,000 units and sold 25,000. The actual profit last year was £526,000What profit would have been earned under a standard marginal costing system?
Ans. supposed to be 406,000
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