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Hello sir, Ive worked some questions on this chapter, but this one im having some problem understanding the concept..please could you explain it
Q.A product has a standard selling price of $80 per unit and a std 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 std absorption costing the sales volume profit variance would have been $2000 adverse. What is the std absorption cost per unit?
The sales must have been 200 units less than budgeted (3,600/18).
Therefore the standard profit per unit must be 2,000 / 200 = $10 per unit.
Therefore the standard absorption cost per unit must be 80 – 10 = $70.
Have you watched my free lectures? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
Infact i had watched lectures on this chapter before from various sources.. I ended up mixing things
But the way you explained it made it simpler and ive understood it now!!
Thanks sir 🙂
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