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Standard costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard costing

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by John Moffat.
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  • January 14, 2022 at 4:02 pm #646058
    dingdong02
    • Topics: 13
    • Replies: 1
    • ☆

    The following question is taken from the July to December 2017 exam period.
    A company uses standard marginal costing to monitor performance. The budgeted profit and budgeted fixed overhead for a month were $25000 and $12000 respectively. In the month the following variance occurred:
    Sales volume contribution $1000 Adverse
    Sales price $2000 favourable
    Total variable costs $4000 Adverse
    Fixed production overhead expenditure $500 Adverse
    What was the actual profit for the month?
    Ans) 21500
    Sir my question is why they didn’t deduct budgeted fixed overhead from the actual contribution?

    January 15, 2022 at 9:07 am #646094
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 50017
    • ☆☆☆☆☆

    The budgeted profit will already be after charging the budgeted fixed overheads, so it is only the variance that needs adjusting for.

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