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UNDERSTANDING THE OPERATING STATEMENTS UNDER MARGINAL & ABSORPTION COSTING

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › UNDERSTANDING THE OPERATING STATEMENTS UNDER MARGINAL & ABSORPTION COSTING

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • October 21, 2015 at 7:44 am #277988
    Ruksar
    Member
    • Topics: 6
    • Replies: 27
    • ☆

    Dear Mr Moffat,

    i am going to sit for my exam in a couple of hours and i still dont understand the operating statements under Marginal and Absorption costing given the variances in a question. is there any format or quicker way to understand it? i have gone through the lectures and i do not have enough time to go through it again.

    Your swift response will be highly appreciated 🙂

    Rukhsaar.

    October 21, 2015 at 8:04 am #278003
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    You are obviously taking the exam as computer based, and so do not worry about the format. The computer will already have the format and your job will be to type in some of the figures.

    Good luck with the exam.

    October 21, 2015 at 10:03 am #278038
    Ruksar
    Member
    • Topics: 6
    • Replies: 27
    • ☆

    What i meant was how to understand the treatment of variances when ur given a budgeted profit or an actual profit to an absorption or marginal qsn. Thank u for ur wishes

    October 21, 2015 at 10:28 am #278051
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    You start with the budget profit and then add favourable variances and subtract adverse variances to arrive at the actual profit.

    The only differences between absorption and marginal are the sales volume variance and the fixed overhead variances.

    The sales volume variance is calculated using standard profit if it is absorption costing, and standard contribution if it is marginal costing.

    For fixed overheads, if it is marginal costing then there is only an expenditure variance. If it is absorption costing then their is expenditure and also volume variance.

    All the other variances are the same for both.

    October 21, 2015 at 10:35 am #278056
    Ruksar
    Member
    • Topics: 6
    • Replies: 27
    • ☆

    This explains so much!! Thank you!!

    October 21, 2015 at 3:31 pm #278204
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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