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Y3bl33 Ltd produces a single product. The management currently uses marginal costing, but is considering using absorption costing in the future. The budgeted fixed production overheads for the period are GH¢250,000. The budgeted output for the period is 1,000 units. There were 400 units of opening stock for the period and 250 units of closing stock. If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be A. GH¢37,500 higher. B. GH¢37,500 lower. C. GH¢62,500 higher. D. GH¢62,500 lower.

Y3bl33 Ltd produces a single product. The management currently uses marginal costing, but is considering using absorption costing in the future. The budgeted fixed production overheads for the period are GH¢250,000. The budgeted output for the period is 1,000 units. There were 400 units of opening stock for the period and 250 units of closing stock. If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be A. GH¢37,500 higher. B. GH¢37,500 lower. C. GH¢62,500 higher. D. GH¢62,500 lower.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Y3bl33 Ltd produces a single product. The management currently uses marginal costing, but is considering using absorption costing in the future. The budgeted fixed production overheads for the period are GH¢250,000. The budgeted output for the period is 1,000 units. There were 400 units of opening stock for the period and 250 units of closing stock. If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be
A. GH¢37,500 higher.
B. GH¢37,500 lower.
C. GH¢62,500 higher.
D. GH¢62,500 lower.

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