Budgeted data for June (no opening inventory): Units produced 5,000; Units sold 4,000; Sales 180,000; Direct materials & labour 130,000; Variable overheads 15,000; Fixed overheads 25,000. What is the budgeted profit using marginal costing?

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SSC Financial and Cost Accounting P-1 QUESTION #6126

Question 1

Budgeted data for June (no opening inventory): Units produced 5,000; Units sold 4,000; Sales $180,000; Direct materials & labour $130,000; Variable overheads $15,000; Fixed overheads $25,000. What is the budgeted profit using marginal costing?

$10,000✔️
$36,000
$39,000
$44,000

Correct Answer Explanation

Option A ($10,000) is correct.

Variable cost per unit = ($130,000 + $15,000) ÷ 5,000 = $29

Variable cost of sales (4,000 units) = $116,000

Contribution = $180,000 − $116,000 = $64,000

Profit = $64,000 − $25,000 (fixed overheads) − $29,000 (closing inventory adjustment) = $10,000

More Options