ACCA F2 Marginal Costing Profit

The following budgeted information relates to a manufacturing company for next period:

Units $
Production 40000 Fixed Production Costs 500000
Sales 36000 Fixed Selling Costs 90000

The normal level of activity is 40000

Using absorption costing the profit for next period has been calculated as $ 200000

What would be the profit for next period using marginal costing?

SUGGESTED SOLUTION

Absorption Costing Profit - (Production Units - Sales Units ) X

( Fixed Production Costs / Production Units)

200000 - (40000 - 36000 ) X ( 500000 / 40000 )

Profit using marginal costing = 150000

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