Reference no: EM132561770

Question - Variable costing problem

Selected data for Babar Ltd of past year of operations are presented below

Product X

Production [in units] 25000

Sales [in units] 18000

Selling price $4.00

DLHours 8000

Manufacturing cost

Raw Materials [$] 17000

Salaries of direct labour [$] 24000

Variable overhead 14000

Fixed overhead 8000

Non-manufacturing cost

Variable selling 18000

Fixed selling cost 15000

Estimated fixed cost = $28000

Budgeted Machine hours = 8400

Company uses absorption cost based on machine hours.

REQUIRED -

1. Calculate product cost of product X using variable cost.

2. Calculate product cost of product X using absorption cost.

3. Calculate variable cost of goods for the year.

4. Find the variable-costing net income.

5. Calculate cost of goods for the year using absorption method.

6. Find the net income using absorption method.