ACCA MA · Chapter 7 · Question 10 of 11
How are fixed production overheads treated under marginal costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) As a period cost, charged in full against profit in the period in which they are incurred
Explanation
Marginal costing treats fixed production overheads as period costs. They are deducted in full from total contribution in the period, rather than being absorbed into units and carried forward in inventory.
More Absorption and marginal costing MCQs
- Q1Under marginal costing, how is finished goods inventory valued?
- Q2Finished goods inventory increased by 500 units during a period. The fixed production overhead absorption rate is $8 per unit. How will…
- Q3A company's profit for a period under marginal costing was $62,000. Opening inventory was 1,200 units and closing inventory was 900 units…
- Q4A product has the following data per unit: selling price $40, direct materials $12, direct labour $8, variable production overhead $3…
- Q5Budgeted production was 10,000 units, with budgeted fixed production overheads of $80,000, absorbed per unit. Actual production was 11,000…