Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Determine Profit in Long-Term
To demonstrate the point about profit in the long-term, let us assume that a company sells and makes a single product. There are no opening stocks of the product at the beginning of period 1, for that the variable production cost is Ksh.4 and the sales price Ksh.6 per unit. However fixed costs are Ksh.2, 000 per period, of that Ksh.1, 500 are fixed production costs,
Period
Period 2
Sales
1,200 units
1,800 units
Production
1,500 units
What would the profit be in all period utilizing the following methods of costing?
a) Absorption costing. Suppose usual output is 1,500 units per period.
b) Marginal costing.
Solution
It is significant to notice that even if sales and production volumes in each period are different and then the profit for each period via absorption costing will be different from the profit via marginal costing, over the full period, net production equals sales volume, the net cost of sales is the similar, and hence the net profit is the same via either method of accounting.
a) Absorption costing: the absorption rate for fixed production overhead is,
= £ 1,500/£1,500 units
= £ 1 per unit
Period 1
Period 3
Ksh.
7,200
10,800
Production costs
Variable
6,000
12,000
Fixed
1,500
3,000
7,500
15,000
Add opening stock b/f
-
9,000
Less closing stock c/f
Production cost of sales
6,00
(Under-)/over-absorbed overhead
Total production costs
Gross profit
1,200
1,800
Other costs
500
1,000
Net profit
700
1,300
2,000
b) Marginal Costing
Variable production cost
Variable production cost of sales
4,800
Contribution
2,400
3,600
Fixed costs
4,000
Profit
400
1,600
High-Low method of cost estimation and Number of Photocopies as the cost driver, what would be the resulting cost equation for Maintenance Costs?
what is the meaning or definition of cost objective?
This is difficult to perceive cash maintained in the vault as an investment. Fairly, you would be thinking that if we invest cash, then how can cash itself be an investment? Howeve
distinguish between bin card and store ledgre
Place a prepared slide of Giardia first under tlie low power and then under the high power of the microscope and observe tlie followilig characters. i) Bilaterally symmetrical
cite some example on how to to calculate variable cost
Portions of the financial statements for Hawkeye Company are provided below. HAWKEYE COMPANY Income Statement For the Year Ended December 31, 2013 Sales $ 850 Cost of goods sold (3
how variable cost help in decision making.with suitable example
Critically evaluate the product costing and pricing practices actually in use in modern manufacturing organisations inany of the three countries in the Asia Pacific region, prefera
A retailer knows the annual demand for one of its product is 100,000 units, the ordering costs are £25 per order and the average carrying cost per unit is 35 pence. You are require
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd