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ScotlandAccountingQuick questions
Preparing Management Accounting Information
Quick questions on Marginal and absorption costing - SQA Higher Accounting
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is special order?Show answer
Accept extra units if the offered price is above variable cost, so each unit adds contribution, provided fixed costs and normal-price sales are not harmed.
What is discontinue a product?Show answer
Keep a product while it makes a positive contribution, even if it shows a loss after fixed overhead, because dropping it loses the contribution while the unavoidable fixed costs remain.
What is q1?Show answer
Selling price £60, variable cost £45. Calculate the contribution per unit. [1 mark]
What is q2?Show answer
Contribution per unit is £15 and 5,000 units are sold. Fixed costs are £50,000. Calculate the profit.
What is q3?Show answer
State the relevant cost to compare against a bought-in price in a make or buy decision when there is spare capacity. [1 mark]
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