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Standard Marginal costing

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

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 14, 2014 at 12:58 pm #165261
    Shafiq
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    Dear Sir,

    Could you please explain the answer for the following question.

    38. A company uses a standard marginal costing system. The following figures are available for the last accounting period in which the actual profit was $124,000

    What was the standard profit for the actual sales in the last accounting period?

    $134,000

    $114,000

    $123,000

    $125,000

    April 14, 2014 at 5:01 pm #165272
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    For the benefit of anyone else looking at this question, the following addition information was given:

    Sales volume contribution variance 9,000 (F)
    Sales price variance 8,000 (A)
    Total variable cost variance 13,000 (F)
    Fixed cost expenditure variance 4,000 (A)

    We are given the actual profit, and so we need to use the variances ‘backwards’ to find the standard profit (for example, since the fixed cost variance is 4,000 (A), the actual profit will be 4,000 less than the standard profit and so the standard profit would be 4,000 more than the actual profit).

    So…..the standard profit is 124,000 + 8,000 – 13,000 + 4,000 = 123,000.

    (The sales volume variance is not relevant – this is the difference between the original budget profit and the standard profit for the actual sales. We are not asked for the original budget profit – we are asked for the standard profit for the actual sales.)

    April 28, 2014 at 3:11 pm #166594
    Shafiq
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    Thank you Sir and sorry that I missed to post the additional information of this question.

    April 28, 2014 at 4:27 pm #166631
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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