Page 236 - BA2 Integrated Workbook - Student 2017

Fundamentals of Management Accounting

5.3 A business has just completed its first year of trading. The following information
has been collected from the accounting records.

Variable production cost per unit $6.00

Variable selling and administration cost per unit $0.20

Fixed production costs $90,000

Fixed selling and administration costs $22,500

Production was 75,000 units and sales were 70,000 units. The selling price was
$8 per unit throughout the year.

What is the difference in profit using marginal costing for inventory
valuation, rather than absorption costing?

A $8,500

B $7,500

C $6,000

D $2,500

CHAPTER 6 – BUDGETING

6.1 Which two of the following would be included in a cash budget?

 Repayment of a bank loan.

 Proceeds from the sale of a non-current asset.

 Depreciation of production machinery

 Bad debts write off.

 Allocated fixed overheads

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