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Make profit statements for each of the quarters

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Reference no: EM132548836

Kamelwa Limited manufactures and sells a single product coded Kams. The following data relate to the four quarters in the last financial year.

K

Selling price per unit 110

Variable cost per unit 60

Fixed cost per quarter 12000

Normal activity is 500 units and production and sales for the four quarters are as follows:

                    Quarter 1          Quarter 2        Quarter 3                 Quarter 4

                             units                   units                units                          units

Sales                 500                    400                550                  450

Production          500                    500                450                  500

There were no opening inventory at the start of quarter 1.

Required

Question (i) profit statements for each of the quarters 1 to 4, based on absorption costing principles.

Question (ii) profit statements for each of the quarters 1 to 4, based on marginal costing principles.

Question (iii) Comment briefly on the results obtained in each period and in total by the two systems.

Reference no: EM132548836

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