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Qn help

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Qn help

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by michael.
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  • March 27, 2015 at 9:42 pm #239264
    Jonathan
    Member
    • Topics: 2
    • Replies: 7
    • ☆

    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 £526,000

    What profit would have been earned under a standard marginal costing system?

    Ans. supposed to be 406,000

    March 29, 2015 at 10:24 pm #239481
    michael
    Member
    • Topics: 1
    • Replies: 12
    • ☆

    I think it goes smth like this:
    since produced>sold, then absorption costing profit would be more than marginal.
    the difference would be 5000*8*3=120k.
    then you deduct this 120k from 526k and come to 406k.

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