Reference no: EM132549627
A company has a budget to produce 5 000 units of product B in December. The budget for December shows that for Product B the opening inventory will be 400 units and the closing inventory will be 900 units.
The monthly budgeted production cost data for product B for December is as follows:
Variable direct costs per unit N$6.00
Variable production overhead costs per unit N$3.50
Total fixed production overhead costs N$29 500
The company absorbs overheads on the basis of the budgeted number of units produced. Assume that the absorption costing overhead rate has remained constant.
Question 1: What is the budgeted profit for product B for December, using absorption costing?
Select one:
a. N$2 950 lower than it would be using variable costing
b. N$4 700 greater than it would be using variable costing
c. None of all
d. N$2 950 greater than it would be using variable costing
e. N$4 700 lower than it would be using variable costing