Intermediate: Marginal costing and absorption costing profit computations and calculation of break-even point for a given sales
Question:
Intermediate: Marginal costing and absorption costing profit computations and calculation of break-even point for a given sales mix A company has two products with the following unit costs for a period:
Production and sales of the two products for the period were:
Production was at normal levels. Unit costs in opening stock were the same as those for the period listed above.
Required:
(a) State whether, and why, absorption or marginal costing would show a higher company profit for the period, and calculate the difference in profit depending upon which method is used. (4 marks)
(b) Calculate the break-even sales revenue for the period (to the nearest £000) based on the above mix of sales. The selling prices of products A and B were £5.70 and £6.90 per unit, respectively.LO1
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