AAT Practice Assessment 1 - Task 1.3

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KeeleyJ
KeeleyJ Registered Posts: 4
edited August 2018 in Management Accounting: Decisions and Control
Can someone help me get the currency figure for opening inventory? I have worked out it will be 3,000 units, but can't seem to come back to the book answer...

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  • kevc90
    kevc90 Registered Posts: 8
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    Hi,

    Bear in mind for absorption costing, you include the unit rate for fixed overheads. So you have the two direct costs for materials and labour (15 and 10 per unit respectively) then divide variable costs and fixed costs per production volume. So 15+10+(230,000/10000)+(450000/10000). That should give you 93 multiplied by your opening inventory of 3000 gives you 279,000.

    For marginal, the only difference is you leave out the fixed cost per unit so 15+10+23=48 multipled by 3000 to give you 144,000.

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