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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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