Reference no: EM132608373

Jus' Ryte Pastries manufactures cheesecakes to be sold to its customers. The entity absorbs overheads based on the number of cakes that are produced. The following information below relates to the production and sales of the cupcakes for the period ending 31 March 2020:

The following budgeted data are applicable to the entity:

Production 250,000 units

Fixed overheads $2,000,000
The actual data are as follows:

Production 300,000 units
Sales 250,000 units
Fixed overheads $2,250,000
Fixed selling $250,000

The unit cost for each item is listed below:

Direct material $37.50
Direct labour $25.00
Direct expenses $12.50
Variable overheads $11.00
Variable selling $14.00
One cheesecake is sold for $250.00

Note: At the beginning of the period, the entity had 30,000 units of cheesecake.

Required:

Question 1: Complete an income statement using marginal costing.

Question 2: Complete an income statement using absorption costing.

Question 3: Reconcile profits between marginal costing and absorption costing.

Question 4: Explain the terms 'normal loss', 'abnormal loss' and 'abnormal gain.'