A company uses standard absorption costing to value inventory. Its fixed overhead absorption rate is $12 per labour hour and each unit of production should take four labour hours. In a recent period when there was no opening inventory of finished goods, 20000 units were produced using 100000 labour hours. 18000 units were sold. The actual profit was $464 000.

What profit would have been earned under a standard marginal costing system?

(a) $368000

(b) $440000

(c) $344000

(d) $560000

(2 marks)

ACCA F2 Management Accounting