A-LevelAccountingAbsorption Costing vs. Marginal CostingOct/Nov 2021Paper 1 Q251 Mark
A business had no opening inventory. In one month it produced 4000 units and sold 3500 units. The following information is available. Per unit $Selling price: 70 Variable cost: 30 Fixed cost: 15 How would inventory value and profit vary between using absorption costing and marginal costing?
Aabsorption costing higher by $7500 (inventory), absorption costing higher by $7500 (profit)
Babsorption costing higher by $7500 (inventory), absorption costing lower by $7500 (profit)
Cmarginal costing higher by $7500 (inventory), marginal costing higher by $7500 (profit)
Dmarginal costing higher by $7500 (inventory), marginal costing lower by $7500 (profit)
✓ Correct Answer
The correct answer is A. This question tests the candidate's understanding of absorption costing vs. marginal costing within the Accountingsyllabus. The examiner's mark scheme requires...
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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