Reference no: EM132527495
Crystal Ltd makes and sells two products, Omega and Sigma. The following information is available for period 3:
Omega Sigma
Production (units) 6,000 7,500
Sales (units) 5,500 5,800
Opening Stock (units) 1,000 1,500
Budgeted capacity (units) 4,000 3,000
Financial Data Omega Sigma
$ $
Unit selling price 800 850
Unit Cost:
Direct Materials 300 150
Direct labour 50 200
Variable production overheads 100 200
450 550
Fixed production overheads 60 10
- Fixed administration overheads were $980,000 and Fixed selling overheads were $720,000.
As the Cost Accountant you have been asked to do the following:
Question a. Show the income statement based on marginal costing principles.
Question b. Show the income statement based on absorption costing principles.
Question c. Reconcile profit statements for both techniques.
Question d. Management is planning on launching a marketing campaign to increase the sales of the product that is more profitable. What product should management focus on increasing sales for.
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