ACCA MA · Chapter 7 · Question 11 of 11
In a period, a company produced 10,000 units. Profit under absorption costing was $45,000 and profit under marginal costing was $51,000. The fixed production overhead absorption rate is $4 per unit, and opening inventory was 2,500 units. How many units were sold in the period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 11,500 units
Explanation
Marginal profit is $6,000 higher, which means inventory must have fallen. Fall in inventory = 6,000 / 4 = 1,500 units, so closing inventory = 2,500 - 1,500 = 1,000 units. Sales = opening inventory + production - closing inventory = 2,500 + 10,000 - 1,000 = 11,500 units.
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