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

Costs and cost behaviour — practice question

A business produces and sells one product. It is sold at $\$10$ per batch. The variable cost is $\$4$ per batch. Fixed costs are absorbed using a normal activity level of $5000$ batches at $\$1$ per batch. What is the profit, using marginal costing, if the company produces and sells $6000$ batches?

  • A$\$24\,000$
  • B$\$30\,000$
  • C$\$31\,000$
  • D$\$36\,000$

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