Note for students:

These answers are laid out for ease of marking and not necessarily in the layout you would give as your answer.

They also do not show all the intermediate steps in determining an answer. This is because this is a sheet for marking, not specifically a revision aid.

The answers to written parts of questions are not laid out as model answers, just indications of what is expected.

If you make an error early on in a question it does not mean that you won’t get any marks from then on. There are always marks for method.

Jonathan Rooks
Management Accounting Systems Main Answers January 2012 11/12

Question One.

A. You are to calculate the actual profits under both Marginal Costing and Absorption Costing. (18 marks)

B. Explain why there is a difference. (7 marks)

Total 25 marks.

Students have been taught a particular method. If they don’t use this method but get the correct results they will be given the marks.

|Step One | | |Marginal |Absorption | |
| | |Variable |10 |10 | | |
| |Fixed costs absorbed | |6 | | |
| | | |10 |16 | |2 marks |
| | | | | | | |
|Step Two |O/S | | | | | |
| | |2,000 | | | | |
| |Made | | | | | |
| | |5,000 | | | | |
| |Sold | | | | | |
| | |3,000 | | | | |
| |C/S | 4,000| | | | |
| | | | | | | |
| |Change | |If up then Absorption costing higher |
| | |2,000 | |
| | | |If down then Marginal Costing higher |
| | | | | | |1 mark |
|Step Three |Difference | £ 12,000 | | | |2 marks |
| | | | | | | |
|Step Four |Marginal Profit calculation | | | | |
| | |£