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

Costs and cost behaviour — practice question

W Limited uses marginal costing and manufactures two items, Product A and Product B.
(a)[8]

Draw up a statement for the year to show: - the budgeted total contribution for each product - the budgeted total profit for each product - the budgeted total profit.

(b)[9]

Fill in the table to show the effect of Option 2.

(c)[7]

Advise the directors which option they ought to choose. Support your answer with both financial and non-financial factors.

(d)[4]

Explain how unit contribution may be applied by a business that manufactures several products when there is a shortage of production materials.

(e)[2]

State two additional uses of marginal costing for a business.

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