Bucky Gee manufactures a single product and has prepared the following data for the year ended June
Question:
Bucky Gee manufactures a single product and has prepared the following data for the year ended June 30, 2020 and June 30, 2021.
Selling price per unit $95
Direct materials per unit $25
Direct labour (30 minutes per unit @ $10 per hour) ?
Variable production overhead |
| $19 per direct labour hour | ||
Sales commission per unit
|
| $2 | ||
Fixed production overhead |
| $17,500 per annum | ||
Fixed administrative cost |
| $9,000 per annum | ||
Normal activity level |
| 700 |
Expected production and sales
Year ended June 30 2020 | Year ended June 30 2020 | |
Production (units) Sales (units) | 600 520 | 820 850
|
Required
Compute the production cost per unit under marginal costing and absorption costing
Prepare income statements for the years ended June 30, 2020 and June 30 2021 using marginal costing
Prepare income statements for the years ended June 30, 2020 and June 30, 2021 using absorption costing.
Prepare the statement to reconcile the difference in profit for BOTH years
Explain why a business might consider it appropriate to use both the marginal and absorption costing methods
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison