A Company started its business in 2010 producing luxury shoes for young people. The normal production...

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A Company started its business in 2010 producing luxury shoes for young people. The normal production of handbags at an average of 3,300 units annually. The actual production sales for the year 2015, 2016 and 2017 are as follows: Actual production (units) Year Sales (units) 2015 2,400 2,000 2016 3,300 3,500 4,000 2017 4,200 The selling price, cost and expenses for the shoes are: Selling price per shoes Direct raw materials costs per shoes 10,000 5,000 Direct labour costs per shoes Variable manufacturing overhead per shoes Fixed manufacturing overhead per month Sales commission Selling and administrative expenses per month 2,000 1,000 330,000 10% on sales 198,000 Question 1) Calculate the product cost per unit of shoes by using absorption costing and variable costing. 2) Prepare the income statement for year 2015, 2016 and 2017 by using absorption costing. A Company started its business in 2010 producing luxury shoes for young people. The normal production of handbags at an average of 3,300 units annually. The actual production sales for the year 2015, 2016 and 2017 are as follows: Actual production (units) Year Sales (units) 2015 2,400 2,000 2016 3,300 3,500 4,000 2017 4,200 The selling price, cost and expenses for the shoes are: Selling price per shoes Direct raw materials costs per shoes 10,000 5,000 Direct labour costs per shoes Variable manufacturing overhead per shoes Fixed manufacturing overhead per month Sales commission Selling and administrative expenses per month 2,000 1,000 330,000 10% on sales 198,000 Question 1) Calculate the product cost per unit of shoes by using absorption costing and variable costing. 2) Prepare the income statement for year 2015, 2016 and 2017 by using absorption costing.

Answer rating: 100% (QA)

a ABSORPTION COSTING METHOD Under Absorption costing method following cost are considered as Product costs Period Costs Product Costs Period Costs Dir... View the full answer