MDCL HELP - Absorption/Marginal costing
GeorgiaH
Registered Posts: 107
Can any one help me with this question please
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Comments
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Hi,
Hopefully 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 Costing
1. 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 Costing
1. 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?0 -
Oh great thanks very much. Makes much more sense
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I am stuck with marginal costing month 3- production cost. please help
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@bushra Marginal costing does not include fixed costs. So you need to divide variable cots £250,000 by 10,000 production then add direct costs and variable together 15 + 10 + 25 = 50
Then £50 x 10,000 production units = 50,000 for production
Does this make sense?1 -
thanks a lot
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2
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Charlie
Contribution per unit is selling price - all variable costs (£6.00 - £3.50) = £2.50
Breakeven formula is fixed costs / contribution per unit, so £43,750 / £2.50 = 17,500 units
Margin 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.0 -
Hi @bushra
sample 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)2 -
What are you struggling with on 9A?
Sales - 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 / revenue
Net profit margin = net profit / revenue1 -
@GeorgiaH In all honesty I haven't revised in the slightest for it. I have some revision aids from my college surrounding internal controls and the report writing but everything else is pre-learnt material so I'd just flick through my previous notes and probably re-do the sample assessments for Budgeting, Financial Statements & MDCL (though that's still fresh, only sat that last week!)0
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@Irrorate It is quite hard to revise for to be honest because there are so many different questions they can ask you on. Well that's good it is fresh in your mind, i sat MDCL on the 27th April but i am dreading that question as i found it hard to even revise for that exam! :dissapointed:0
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@GeorgiaH I'm not sure I've even looked at a full sample assessment for it yet! I should probably do that... lol! I have lessons on Tuesday & Thursday then exam on Friday so should have plenty of time to flick through my notes. Will probably do bits this weekend it can't be that bad surely!
What did you struggle with on MDCL?0 -
@Irrorate haha if your confident just flicking through your notes you probably don't need to have a look at the exams. People were saying on discussion site that the exam doesn't even relate to the pre-release info but our college has been concentrating on learning that really but i have been practicing the writing questions and BPP sample papers. A few were also saying synoptic was very similar to sample assessment on AAT site.
MDCL 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!0 -
@GeorgiaH luck of the draw on the day I guess! We've got people sitting it before my sitting on Friday so hopefully can get some feedback prior to sitting it, might be helpful. AAT's Accounting Systems & Controls section looks OK to revise from with its real life scenario!
Let me know if I can offer any help on the variances ABC costing came up in my MDCL, think I did ok!0 -
@Irrorate Yes it definitely is. You know when you revise something really hard because you struggle with it, then you finally understand, get to the exam and don't even get asked it! very disappointing haha.
Although 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!0 -
@Irrorate Mine is very similar to yours actually. We have 2 teachers learning us different topics so currently learning cash management on a wednesday and synoptic on thursdays. So synoptic next week, Cash management exam June 21st (then will have to re-sit financial statements as i only got 61%) then come back in Sept for credit control
Ah 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 told0 -
@GeorgiaH I think our college made a mistake teaching synoptic as an actual lesson as all they can teach is internal controls and to be honest they're fairly straightforward it's all common sense and basically is based around fraud, collusion and segregation of duties! I think I could've done one optional alongside it at least.
I'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?0 -
@Irrorate Yes mine too! for about 5 lessons we have literally sat there repeating problems exactly what you said, fraud etc. Pretty much a waste of time. Yes i agree it is quite a lot of common sense, but maybe need to look over how to word the answers and what to look for in the text. I'm sure it is personal preference really isn't it, i haven't even looked at credit control yet so i can't comment but some people like numerical questions some find them difficult.
Yes 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.0 -
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