Reference no: EM132548816

Syarikat Koro has the following costs for its single product, based on planned production and sales of 46,000 litres in a period:

                                                      RM per litre

Prime costs                                           5.20

Production overhead- all fixed                     2.8

Non- production overhead variable              0.65

fixed                                                    1.70

                                                          10.35

Actual production and sales in the period were:

Production 46,000 litres

Sales 45,600 litres (at RM12·00 per litre)

There was no finished stock at the beginning of the period. Variable costs per litre and total fixed costs in the period were as planned. Variable non-production overheads vary in total with the number of litres sold.

Required:

Question (a) Prepare profit statement for the period using absorption costing.

Question (b) Explain fully why, and calculate by how much, the profits for the period would be different if marginal costing was used instead.