Question 3 (30 marks) The Nima Company Limited produces and sells executive office desks from a...

 

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Question 3 (30 marks) The Nima Company Limited produces and sells executive office desks from a shop at the Junction Mall. Selected cost and operating data relating to the product for 2018 is given below: Selling Price Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative per unit sold Fixed selling and administrative per year Units in beginning inventory Units produced during the year Units sold during the year Required: a. Assume the company uses absorption costing method. i. Compute the unit product cost. ii. Prepare an income statement for the year. 10,000 9,000 b. Assume the company uses variable costing method. i. Compute the unit product cost. ii. Prepare an income statement for the year. GHe 50 10 6 4 100,000 3 50,000 3 marks 6 marks 3 marks 6 marks c. Reconcile the variable costing and absorption costing methods operating incomes and explain why they are different. 8 marks d. Explain how fixed manufacturing overhead costs are shifted from one year to another year under the absorptions costing method. 4 marks Question 3 (30 marks) The Nima Company Limited produces and sells executive office desks from a shop at the Junction Mall. Selected cost and operating data relating to the product for 2018 is given below: Selling Price Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative per unit sold Fixed selling and administrative per year Units in beginning inventory Units produced during the year Units sold during the year Required: a. Assume the company uses absorption costing method. i. Compute the unit product cost. ii. Prepare an income statement for the year. 10,000 9,000 b. Assume the company uses variable costing method. i. Compute the unit product cost. ii. Prepare an income statement for the year. GHe 50 10 6 4 100,000 3 50,000 3 marks 6 marks 3 marks 6 marks c. Reconcile the variable costing and absorption costing methods operating incomes and explain why they are different. 8 marks d. Explain how fixed manufacturing overhead costs are shifted from one year to another year under the absorptions costing method. 4 marks

Answer rating: 100% (QA)

a Absorbtion Costing i Unit product cost WN 1 Direct Materials Direct Labour Variable Overhead Fixed ... View the full answer