MAC Help Please

gemma2020

I got my MAC mock exam back yesterday and I am confused!

In section 1 task 1.1 c we were asked to do an operating statement for marginal costing where the units produced was different to the amounts sold so there was a closing stock value.

However in the answers they do not take into account the closing stock figure at the production cost of the stock minus the fixed cost element. All the examples in the book do include this.

Does anyone know why this would be?

CelticStar

Are they using absorption costing or marginal costing, if it's absorption costing the stock will be valued at the total of variable and fixed costs, not just variable costs.

Does that help?

gemma2020

In there answer they do not include the closing stock at all as I would have expected.

The operating statement is using marginal costing

Cyfarthfa

If I remember correctly, they flex the budget/actuals to the sales amount which eliminates the closing stock.

gemma2020

Oh I see, thank you very much!