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# MDCL HELP - Absorption/Marginal costing

GeorgiaH
AAT Student Posts:

**107**Can any one help me with this question please

0

## Comments

44Hopefully just doing the opening inventory for month 2 will help then can figure out the rest for yourself, calculate the cost p/unit first so using month 1s' figures:

Absorption Costing1. 15+10+(230,000/10,000)+(450,000/10,000) = 93 cost per unit

Secondly find out how many units are left at end of month and convert that to money value:

2. (10,000-8,000) x 93 = 186,000 closing balance

Marginal Costing1. 15+10+(230,000/10,000) = 48 cost per unit (Note how the fixed costs are ignored as marginal costing does not carry the fixed costs forward into the next period, instead they are posted into the period they are incurred)

Then exactly the same as before

2. (10,000-8,000) x 48 = 96,000

Note that in absorption costing the fixed overheads are absorbed into the unit (shown in above calculation) so the fixed overheads line in the question will be 0 in month 2 and 3. In marginal costing it assumes the fixed overheads relate to the period so the fixed overheads line will show 450,000 in both month 2 and month 3.

When coming to studying this it is best to focus on how the fixed costs behave as it is the only difference between the two costing systems.

Does this make sense?

10725107Then £50 x 10,000 production units = 50,000 for production

Does this make sense?

2525139https://forums.aat.org.uk/discussion/comment/453841#Comment_453841

25thanks. can you plz help me with task 10a assessment 1?

139CharlieContribution per unit is

selling price - all variable costs(£6.00 - £3.50) = £2.50Breakeven formula is

fixed costs / contribution per unit, so £43,750 / £2.50 = 17,500 unitsMargin of safety % is

(actual units - breakeven units) / actual units, so (35,000 - 17,500) / 35,000 = 0.5 or 50%.You should be able to work out Delta with the same formulae.

25Sorry. I meant Assessment 2 9a and 10a

107sample assessment 2 - 10a...

For selling price actual you would do £800,000 / 40,000 sales volume = £20 per pair (schocs)

You work variable price actual the same way £480,000 / 40,000 sales volume = £12 per pair (shocs)

Then work out the forecast using the forecast figures, Then work snugs out the same way

(Don't forget that all figures in the table below sales volume are in thousands £000)

139Sales - 20,000u @ £18 each = £360,000

Needs to make a net profit margin of 25%, so 25% of revenue has to be profit. £360,000 x 25% = £90,000

If sales are £360,000 and profit is £90,000 then costs must be £360k - £90k = £270k

Target cost per unit - £270k / 20,000 units is £13.50 each.

10A @GeorgiaH has answered above.

Gross profit margin =

gross profit / revenueNet profit margin =

net profit / revenue107139107139107139What did you struggle with on MDCL?

107MDCL i was fine with variances but i always forget how to work out the fixed overhead efficiency, capacity and volume (ok on the easy one expenditure haha)

Also struggle really bad with the writing questions, and ABC Costing :dissapointed: which i why i am dreading the question in the synoptic!

139Let me know if I can offer any help on the variances ABC costing came up in my MDCL, think I did ok!

107Although i stuggle with the writing questions on MDCL i felt like I done good with them on my exam but maybe I was just waffling on haha. I will do thank you Goodluck in your exam!

139107139107Ah yes that is a pain having to renew for then. Could you not try sit your exam sooner or would college not allow you to? Credit control is supposed to be quite straight forward I have been told

139I've heard mixed things about credit control, some say it's straightforward and others say it's difficult.. not really sure! I'm lucky to be working in an accounts office though so I do tend to find the theory easier when I'm working it in practice.

It's a shame about your FS! Are you feeling better this time around?

107Yes i work in accounts too, it is easier as you can relate to what your own control systems are

I know i was gutted failing FS but at least i wasn't far off i suppose. I was quite unlucky i just could not make my statements match which then made me switch round all my answers trying to fix it making me doubt myself whether it was Dr or Cr. Re-sit isn't booked in yet so ive been trying to concentrate on MDCL and the synoptic written questions.

13925Can u plz help me with Task 8 Assessment 1

Optimal production unit

139