B2- 1.
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Cedric company used the absorption costing to absorb the overheads for the first quarter of 20X1. Now the new management accountant is considering using the marginal costing to prepare the costing reports for the second quarter.
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Cost card
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$
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Direct material
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7
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Direct labor
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8
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Variable overhead
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2
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Prime cost
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17
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Fixed overhead
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3
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Total factory cost
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20
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Profit
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10
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Selling price
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30
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There is also a variable selling cost per unit of $1.
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Overheads are absorbed on a per unit basis. Actual overheads are $600000.
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Actual sales and production units for the second quarter are given below.
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April - June
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Sales
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150000
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Production
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160000
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There is an opening inventory of 20000 units at the beginning of April.
What is the profit under absorption costing?
A. $1230000
B. $1240000
C. $1250000
D. $1260000
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