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A product has a standard selling price of $80 per unit and a standard contribution of $18 per unit. In the last period the sales volume contribution variance was $3600 adverse. The management accountant calculates that if the company had used standard absorption costing the sales volume profit variance would have been 2000 adverse. What is the standard absorption cost per unit?
Why is it $8
What i did is
3600/18= 200 units
Then 2000/200=$ 10
Where am i lacking pls explain?$10 is the standard profit per unit, not the absorption cost.
The standard absorption cost per unit must be $80 – $10.
Joint process Costing.
Hallo John.
I came across with this question from Kaplan exam kit. Can you please help me with small part of the question.
the question says two products w and x are created from a joint process both products can be sold immediately after spilt off there are no opening inventories or work in progress the following information is available for the last period.total joint costs 776160
product production units sales units selling price
W 12000 10000 10X 10000 8000 12
using the sales volume method of apportioning joint process costs what was the value of the closing inventory of product X for the last period.I have managed to get the answer to this question up to this point.
product w 12000*10 equals 120000
product x 10000*12 equals 120000
therefore joint product costs are apportioned to the ratio of 1.1
amount apportioned to product X is 776160/2 equals 338080
that is how far i have managed to do the question but down the line it says 20 percent of X production is in closing inventory which equals 77616. I could not see where the 20 percent is coming from. Can you please help me with that pit of the question.
Many thanks for your assistance.In future please start a new thread when you are asking about a different topic. This has nothing to do with calculating the standard absorption cost.
Given that the produced 10,000 units of X and only sold 8,000 units, the remaining 2,000 units are in inventory. 2,000 units is 20% of the 10,000 that were produced.
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