Considering two fiscal years 2013 and 2014, if the selling price in 2013 and 2014 is $55 and $60 per unit respectively and actual units sold in 2013 are 25000 units, then revenue effect of price recovery will be __________?
Correct answer: C. $125,000
- A. $14,500
- B. $135,000
- C. $125,000
- D. $12,500
Explanation
The price recovery effect is the change in selling price multiplied by the base-year units sold: ($60 − $55) × 25,000 = $125,000. The calculation isolates the price change while holding volume at 2013 units.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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