Practice Assessment 1 Task 1.3
BDavi95
Registered Posts: 3
Can anyone please help?
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Answers

What exactly don't you understand about this question? Is it certain calculations or the whole tasks?Kind Regards,
Norvydas Valavicius.0 
I've solved it now, thank you!0

I still need help. Got as far as 3000 units, but not sure how to work out the costs. TIA0

@KeeleyJ
Absorption Costing  All costs are absorbed  inclusive of Fixed Costs
Marginal Costing  Fixed costs are accounted separetely
I'll give you an example for O. Inventory;
Opening Inventory for Absorption Costing;
3,000 units  Now we need to find out how much Fixed Costs + Other variable costs are per unit (we already know Direct Materials + Direct Labour) we simply take £230,000 and divide by number of units made (production units). We do exactly the same with fixed costs.
Our total Variable Costs are; £15.00 + £10.00 + £23.00 + £45.00 = £93.00 p/u
Opening inventory is 3,000 x £93.00 = £279,000
Please bare in mind that when you working out production costs for Month 3 the variable other overheads increased from £230,000 to £250,000 so cost per unit will actually be £95.00 for Month 3.
Closing inventory @ month 3 will be £190,000 (£95.00 x 2,000 units).
I believe you know how to work our cost of sales now, fixed costs will be 0.
Opening Inventory for Marginal Costing;
You do everything exactly the same however you do not include fixed costs in your per unit calculation  as fixed costs are apportioned separately.
So Opening Inventory for Month 3 would be; £144,000 ( £15.00 + £10.00 + £23.00 = £48.00 x 3,000).
The only difference in this is that Fixed costs are included in absorption calculation  as all costs are absorbed to find out cost per unit.Kind Regards,
Norvydas Valavicius.0