Question

A company has closing inventory of 800 units and opening inventory of 600 units in an accounting period the company follows absorption costing system and reports profit of 35000 had the company followed variable costing system for the accounting period it would be have reported profit of Rs 20000 what would be fixed cost per unit for company product

Answer 1

Opening Inventory	600	Unit
Closing Inventory	800	Unit
If Following absorption system
Profit	35,000
If Following Variable costing system
Profit	20,000
Absorption costing system include all cost fixed and variable in production cost.
While Variable costing system include only variable cost in production cost.
Profit enhanced	15,000
(35,000 - 20,000)
Inventory increased in closing - opening	200
(800-600)
Fiixed cost per unit	75
(Profit enhanced/Inventory enhanced)
(15,000/200)