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A company has the following budgeted costs and revenues: $ per unit Sales price 50 Variable production cost 18 Fixed production cost 10 In the most recent period, 2,000 units were produced and 1,000 units were sold. Actual sales price, variable production cost per unit and total fixed production costs were all as budgeted. Fixed production costs were over-absorbed by $4,000. There was no opening inventory for the period. What would be the reduction in profit for the period if the company has used marginal costing rather than absorption costing?

A company has the following budgeted costs and revenues: $ per unit Sales price 50 Variable production cost 18 Fixed production cost 10 In the most recent period, 2,000 units were produced and 1,000 units were sold. Actual sales price, variable production cost per unit and total fixed production costs were all as budgeted. Fixed production costs were over-absorbed by $4,000. There was no opening inventory for the period. What would be the reduction in profit for the period if the company has used marginal costing rather than absorption costing?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...
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A company has the following budgeted costs and revenues:

$ per unit

Sales price 50

Variable production cost 18

Fixed production cost 10

In the most recent period, 2,000 units were produced and 1,000 units were sold. Actual sales price,

variable production cost per unit and total fixed production costs were all as budgeted. Fixed production

costs were over-absorbed by $4,000. There was no opening inventory for the period.

What would be the reduction in profit for the period if the company has used marginal costing rather

than absorption costing?

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