AAT LEVEL 4 Management Accounting: Decision & Control - Task 4 Assessment 1 / osborne books

Just JoinedRegistered Posts: 23
Completely clueless on this question, have looked through books but can't find any examples?

Can anyone help?

Thanks,

• LondonRegistered Posts: 136
please does anyone know the answer to this question? im also curious
• Registered, Tutor Posts: 236
Hi Sophie
This is similar to the one you just asked about, only this time they want the profit for month 2 as well as month 3.

For the month 2 profit, the closing inventory is based on month 2 costs and the opening inventory is based on month 1 costs

For example, in month 1

Material = £35 per unit
Labour = £25 per unit
Variable overhead = £160,000/8,000 units = £20 per unit
Fixed overhead = £304,000/8,000 units = £38 per unit
Total cost = 35+25+20+38 = £118 per unit

Inventory at end of month 1/beginning of month 2 = £118 x (8,000 - 6,500) = £177,000
• Registered, Tutor Posts: 236
Sorry, I should have said that my last example was absorption cost

Marginal cost is 35+25+20 = £80 per unit