A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2010 · Q281 Mark

A manufacturer has 700 units of finished goods in stock on 1 March. On 31 March the total number of units in stock is 770. At present, stock is valued using the total costing method. What would be the effect on the operating profit if the marginal costing method is used for stock valuation?

Aincrease operating profit

Bno change in operating profit

Cno change in operating profit but a 10% increase in gross profit

Dreduce operating profit

✓ Correct answer

D: reduce operating profit

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2010 Paper 1 Variant 2, question 28.

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