Marginal Cost and Profit/Loss Calculation Based on Absorption Costing and Marginal Costing

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Marginal Cost:It is the marginal cost of production which is all about to change in total
production cost which comes from the making or producing the additional unit. Hence, it can
be calculated by divide the change in production cost by the change in quantity. Therefore, in
the present scenario, it is an important measurement because it accounts for an increase as
well as decrease cost of production that allows the firm to evaluate how much company
should actually pay. Or else, it will normally decrease with a short range but on the other side
it is also increase when it produces more.
Profit and loss based on absorption costing
Absorption Costing Profit/Income Statement For The Month June
Sales revenue (1500 * 35) £52500
Less: Cost of the Goods Sold
£
Opening Inventory £
Add: Cost of the goods manufactured (£27*1500) £ 40500
Gross Profit
£12000
Less: Selling fixed expenses £10000
Selling variable expenses (52500*15%) £7875
Net loss £5875
(Fixed manufacturing overhead cost assumed at £15000)
Interpretation- with the help of the above calculation and its analysis it is clear that with the
help of the absorption costing the company FASTRAX AND MAXWELL has incurred the