Daffy Duck Enterprise produces prenatal vitamins at its factory. The following information relates to the production of
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Question:
- Daffy Duck Enterprise produces prenatal vitamins at its factory. The following information relates to the production of the vitamins for the period ending 31 December 2020.
- Production Sales
- (Units) (Units)
- Budgeted 15,000 14,500
- Actual 16,000 15,500
- Budgeted Actual
- Fixed production cost $150,000 $156,250
- Fixed selling overhead $112,500 $112,500
- The fixed production overhead was absorbed in a pre-determined rate per unit produced. One prenatal vitamin was sold for $90. At the beginning of January 2020, there was an opening inventory of 875 units valued at $52,500; this includes a fixed production overhead of $8,750.
- Required:
- (a) Prepare a marginal costing income statement for the company.
- (b) Prepare an absorption costing income statement for the company.
- (c) Reconcile the income under both statements.
- (d) Distinguish between variable costing and absorption costing.
Related Book For
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
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