A Level Accounting (9706)•9706/11/M/J/25

Explanation
Marginal Costing Profit Calculation Steps:
- Sales revenue = 125 batches × 1,500
- Total variable costs = 125 batches × 500
- Contribution = 500 = $1,000
- Profit = contribution - total fixed costs (700 Why C is correct:
- Marginal costing defines profit as total contribution (sales minus variable costs) less total fixed costs, yielding $700 here. Why the others are wrong:
- A. $500: Ignores variable costs, subtracting fixed from sales only.
- B. 300 over 125 batches.
- D. $1000: Omits fixed costs, equating profit to contribution alone.
Final answer: C
Topic: Costs and cost behaviour
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