Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

A company operates using absorption costing and produces and sells only one product. In the previous month, budgeted overheads came to $\$60\,000$. Planned output was $15\,000$ units, while planned sales were $14\,000$ units. The company now chooses to use marginal costing principles for the previous month. What impact will this have on profits?

  • A$\$3500$ decrease
  • B$\$3500$ increase
  • C$\$4000$ decrease
  • D$\$4000$ increase

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