Question: M&M Company manufactures a single product the claud . the following budgeted figures relate to the claud for one year period. Sales & production (units)

M&M Company manufactures a single product the claud . the following budgeted figures relate to the claud for one year period.

Sales & production (units) 800

Sales $16,000

Production Costs:

Variable $6,400

fixed $ 1,600

Sales distribution Costs:

Variable $ 3,200

fixed $2,400

Fixed cost are incurred evenly throughout the year, actual fixed costs are the same as budgeted. Actual variable costs per unit are also the same as budgeted.

All of the variable production costs are direct costs (ie there are no overheads).

There are no inventories of claud at the beginning of the year.

In the first quarter, 220 units were produced and 160 units were sold.

a) calculate the fixed production costs absorbed by claud in the first quarter if absorption costing is used.

b) calculate the under/over recovery of overheads during the quarter.

c) calculate the profit using absorption costing.

d) calculate the profit using marginal costing.

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