Prepare a statement of quarterly profit

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Reference no: EM13529517

The table below sets out data for the Mobile Phone Manufacturing Company for the four quarters of Year 1.

 

£

Selling price per unit

120

Variable cost per unit

70

Fixed overhead production cost for each quarter

20,000

 

Qtr 1

units

Qtr 2

units

Qtr 3

units

Qtr 4

units

Total

 

Planned production

1,000

1,000

1,000

1,000

4,000

 

Actual production

1,000

1,000

900

1,100

4,000

 

Actual sales

900

1,100

900

1,100

4,000

 

               

The fixed overhead production cost for each month is based on budgeted production of 1,000 units per quarter. The fixed overhead is absorbed into products on the basis of a predetermined overhead rate of £20 per unit. Actual production fluctuates in quarters 3 and 4 due to labour problems. Actual sales fluctuate each quarter due to seasonal factors but the company meets its target for production and sales over the year as a whole.

Required

Prepare a statement of quarterly profit for each of the four quarters of Year 1 using:

(a) absorption costing; and

(b) marginal costing.

Reference no: EM13529517

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