Reference no: EM132546092

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.

Required:

Question i) Complete marginal and absorption statements.

Question 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.

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:

March units

production 2000

sales 1500

Question iii) Prepare the absorption costing and marginal costing income statements for March.