Treats Ltd. manufactures a product that has a budgeted capacity of 24,000 units per month and monthly fixed production expenses relating to this product are estimated at $1,200,000. At the start of May 2022 the company had in store 1,600 units of the product, and there were 1,200 units as closing inventory at the end of the month. During May 2022 the company produced 21,600 units of the product and sold 22,000 units. Administrative and selling expenses for the month of May 2022 were estimated at $2,000,000 and $1,000,000 respectively.

The following information was also taken from the company’s records for the month of May 2022:

 Cost per unit Details

direct labor	400
direct materials	300
Variable overheads	200
	900
selling price per unit	1500

Required:

(a) Profit using marginal costing for May.

(b) Profit using absorption costing for May.

(c) Reconcile the two profit figures.

Answer rating: 100% (QA)

a Profit using marginal costing for May Contribution per unit Selling price per unit Variable cost per unit Contribution per unit 1500 900 Contributio... View the full answer