A-LevelAccountingTraditional costing methods9706/12 · Feb/Mar 2018 · Q281 Mark

A company uses absorption costing and makes and sells one product. In the last month budgeted overheads totalled $60000. Budgeted production was 15000 units and budgeted sales were 14 000 units. The company now decides to apply marginal costing principles for last month. What effect will this have on profits?

A$3500 decrease

B$3500 increase

C$4000 decrease

D$4000 increase

✓ Correct answer

C: $4000 decrease

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Feb/Mar 2018 Paper 1 Variant 2, question 28.

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