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good day sir.
I came across a BPP revision kit question section B MCQ (Birch Co.) in that they asked for a sale volume planning variance and used contribution to come to the figure. As I remember you had said if there is fixed cost given in the cost card you need to use Standard profit. In this question fixed costs were given in the cost card to come to profit.P.S In this particular sum nothing was mentioned whether to use marginal or absorption
But the question does not give a cost card!!!
A cost card shows the standard cost per unit, and if it were absorption costing then they would have absorbed the fixed overheads on a cost card which they have not.
They have given profit statements, and specifically shown the budget and actual contributions – they are marginal costing profit statements.
Given that the actual revenue is $64,000 and the actual selling price is $4 per unit, then then actual sales must be 64,000/4 = 16,000 units.
(BPP have made a typing mistake in the question, under ‘actual results for the period’ they should not have typed ‘budgeted sales’ because that would be nonsense 🙂 )
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