Target Ltd manufactures dart boards and its budget for its first month of trading showed the following Variable production costs 60,000 Fixed production costs 40,000 Production cost of 2,000 boards 100,000 Closing inventory of 500 boards (25,000) Production costs of 1,500 boards sold 75,000 Sales revenue 150,000 Production costs of boards sold (75,000) Variable selling costs (15,000) Fixed selling costs (10,000) Profit 50,000 The budget has been prepared using absorption costing. If a marginal costing system were used then the budgeted profit would be:
2.Target Ltd manufactures dart boards and its budget for its first month of trading showed the following
Variable production costs 60,000
Fixed production costs 40,000
Production cost of 2,000 boards 100,000
Closing inventory of 500 boards (25,000)
Production costs of 1,500 boards sold 75,000
Sales revenue 150,000
Production costs of boards sold (75,000)
Variable selling costs (15,000)
Fixed selling costs (10,000)
Profit 50,000
The budget has been prepared using absorption costing. If a marginal costing system were used then the budgeted profit would be:
- £10,000 lower
- £10,000 higher
- £12,500 higher
- £12,500 lower
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