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Exam 2425 S1

Exam 2425 S1

by Carlota Dos Santos Marcos Cardoso -
Number of replies: 1

Hello, 

On exercise 5.2 I don't understand the formula they are using on the solutions: Looking at the difference in MFC in the FG inventory: - 5 000 € = 0 - 500 * MFC / Practical Capacity. Firstly, I don´t understand why is the value of MFC in FG inventory for variable  costing=0€. Secondly, shouldn't the formula of calculating MFC in FG inventory be : (production-sales)xCOGMunit( depending on the of costing system ). 

Thank you, 

Carlota Cardoso

In reply to Carlota Dos Santos Marcos Cardoso

Re: Exam 2425 S1

by Pedro Pinto da Silva Perdigão -
Hello Carlota,

So, the profit under VC was lower in 5 000€. This is due to the fact that, under FCPC, some of the MFC are accounted as product costs, and since there were 500 unsold units from production, the profits will be different.

You can derive the difference by looking at the MFC attributed to the 500 unsold units.

MFC/unit = 70 000€ / 8 000 = = 8.75€

5 000€ = 8.75 * (8 000 / Practical Capacity) * 500

Practical Capacity = 7 000

Good study!