ACCA MA · Chapter 7 · Question 1 of 11
Under marginal costing, how is finished goods inventory valued?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) At variable production cost only
Explanation
Marginal costing values inventory at variable (marginal) production cost: direct materials, direct labour, direct expenses and variable production overheads. Fixed production overheads are treated as period costs and written off in full in the period.
More Absorption and marginal costing MCQs
- 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…
- Q6Which of the following is an argument in favour of marginal costing?
- Q7Which of the following statements about absorption costing is correct?