Cost and Managenment Accounts
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Marginalabsorp.assignmentspring.docxAssignment
Absorption and Marginal Costing
Due Date : TBA
Instructions: Answer all questions
Question 1
A manufacturing company produces a single product. During the
year ended 31 December 2009, 10,000 units were produced and
sold. There was no opening inventory. The costs of manufacturing
during the year were shown as follows:
Direct Materials 600,000
Direct Labour 200,000
Variable Manufacturing Overheads 40,000
Fixed Manufacturing Overheads 300,000
Variable Selling Overheads 187,500
Fixed Selling and Administrative Overheads 250,000
All the 10,000 units were sold at $200 each.
Costs $
Required:
i) Complete marginal and absorption statements. (25 marks)
ii) Use the same data in part i) above however there was closing inventory of 2,000 units, i.e.only 8,000 units were sold during the year. Complete marginal and absorption statements. (25 marks)
Question 2
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A company commenced business on 1 March making one product only, the cost card of which is as follows:
Selling, distribution and administration expenses are: Fixed $10,000 Variable $7875 The selling price per unit is $35 and the number of units produced and sold were:
Prepare the absorption costing and marginal costing income statements for March. (25 marks) |
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Question 3
A company makes and sells a single product. At the beginning of period 1, there are no opening inventories of the product. The company incurs the following costs:
Variable production cost per unit $4
Sales price per unit $6
Fixed costs are $2,000 per period, of which $1,500 are fixed production costs.
Period 1 Period 2
Sales 1,200 units 1,800 units
Production 1,500 units 1,500 units
Required
Determine the profit in each period using the following methods of costing.
(a) Absorption costing. Assume normal output is 1,500 units per period. (13 marks)
(b) Marginal costing. (12 marks)
