Determine profit by using absorption costing, Cost Accounting

Assignment Help:

Determine Profit by Using Absorption Costing

Assuming the fixed overhead absorption rate was Ksh.3 per litre, then what would be the profit utilizing absorption costing?

a) Ksh.41, 850

b) Ksh.56, 850

c) Ksh.67, 350

d) Ksh.82, 350

Solution

Stock levels reduced; consequently the absorption costing profit would be lower. So you can remove options (c) and (d).

Difference in profit = (8,500 - 6,750) x Ksh.3

= Ksh.5, 250

Absorption costing profit = Ksh.62, 100 - Ksh.5, 250

= Ksh.56,850

The right answer is (b)


Related Discussions:- Determine profit by using absorption costing

Differential analysis, West Industries is a highly decentralized corporatio...

West Industries is a highly decentralized corporation with independent operating divisions. Each division is evaluated and rewarded based on its total net income. One of the divisi

Total landed cost, How many pounds of guava puree are required? a. In a ...

How many pounds of guava puree are required? a. In a month? b. How many in a year? In computing the Total Landed cost for mango concentrate, we are interested in the incre

Capital expenditure budget, Capital Expenditure Budget This represent...

Capital Expenditure Budget This represents the expenditure on all fixed assets throughout the budget period.  Addition intended to profit future accounting periods, or expend

Purpose, what are the purposes of cost accounting

what are the purposes of cost accounting

Cost component, Identify the individual cost components and the total cost ...

Identify the individual cost components and the total cost of delivering the product from supplier to retailer.   Identify each cost in terms of the incremental addition to the pro

allocation of cost, looking for a dissertation of cost allocatio

looking for a dissertation of cost allocation

Making variance analysis more meaningful, Making Variance Analysis More Mea...

Making Variance Analysis More Meaningful To compose variance analysis as useful aid to management is the main objective of variance calculations.  However this can only be don

Importance of cost classification, Importance of Cost Classification A...

Importance of Cost Classification Analysis of cost behaviour is significant to all organizations for effective management. It is since many organizations have a unique cost st

Uniform costing, Uniform Costing It is a general system utilizing agre...

Uniform Costing It is a general system utilizing agreed concepts, standard and principles accounting practices adopted via different entities in the similar industry to ensure

Internal control activities regarding replacement purchases, Your firm is t...

Your firm is the auditor of Easy Hire Pty Ltd (Easy Hire).the company hires out equipment to industries such as construction, engineering & event management. It has 76 branches nat

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd