Page 293 - P1 Integrated Workbook STUDENT 2018
P. 293
Supplementary objective test questions t
Answers to supplementary objective tes
questions
CHAPTERS 1 TO 3 – COST ACCOUNTING
1.1 B
If production is greater than sales (as is the case here) then absorption costing
shows the higher profit.
The difference in profit:
= Change in inventory × Fixed production overhead per unit
= (3,000 – 1,000) × $90
= $180,000
and absorption costing’s profit will be higher
1.2 The answer is $318,000.
$
Absorption costing profit 288,000
Plus: fixed production overhead included in opening inventory 90,000
(6,000 × $15)
Less: fixed production overhead included in closing inventory (60,000)
(4,000 × $15)
––––––
Marginal costing profit 318,000
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