Reference no: EM132548301

X pic produces one product - desks.

Each desk is budgeted to require 4 kg of wood at $3 per kg, 4 hours of labour at $2 per hour, and variable production overheads of $5 per unit. Fixed production overheads are budgeted at $20,000 per month and average production is estimated to be 10,000 units per month. The selling price is fixed at $35 per unit. There is also a variable selling cost of $1 per unit and fixed selling cost of $2,000 per month.

During the first two months X plc expects the following levels of activity:

                                        January                                 February

Production                 11,000 units                       9,500 units

Sales                            9,000 units                   11,500 units

Question (a) How to write a cost card using absorption costing

Question (b) Set out budget Profit Statements for the months of January and February.