A Mini Case (Conceptual Clarification) The standard cost of a product, made by precision Limited (that...
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A Mini Case (Conceptual Clarification) The standard cost of a product, made by precision Limited (that started its operations on January 2006) is as under, Direct Material Cost (Rs) Direct Labour Cost (Rs) Variable Production Cost (Rs) Fixed Production Overhead (Rs) The normal output on which the fixed overhead absorption rate of Rs 7.50 has been calculated is 48000 units per year. 12.00 7.50 3.00 7.50 Production in January 2006 is 2000 units and production in February 2006 is 3200 units. Sales in January 2006 amounted to 1500 units and sales in February 2006 amounted to 3000 units. The selling price per unit is Rs 52.50 and the selling and administrative expenses are fixed at Rs 180000 per year and variable up to 10% of sales value. All fixed costs may be assumed to accrue evenly throughout the year. b) Based on the above information, you are required to prepare profit statements for both months (January 2006 and February 2006) applying, Absorption Costing Technique Marginal Costing Technique A Mini Case (Conceptual Clarification) The standard cost of a product, made by precision Limited (that started its operations on January 2006) is as under, Direct Material Cost (Rs) Direct Labour Cost (Rs) Variable Production Cost (Rs) Fixed Production Overhead (Rs) The normal output on which the fixed overhead absorption rate of Rs 7.50 has been calculated is 48000 units per year. 12.00 7.50 3.00 7.50 Production in January 2006 is 2000 units and production in February 2006 is 3200 units. Sales in January 2006 amounted to 1500 units and sales in February 2006 amounted to 3000 units. The selling price per unit is Rs 52.50 and the selling and administrative expenses are fixed at Rs 180000 per year and variable up to 10% of sales value. All fixed costs may be assumed to accrue evenly throughout the year. b) Based on the above information, you are required to prepare profit statements for both months (January 2006 and February 2006) applying, Absorption Costing Technique Marginal Costing Technique
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Precision Limited Under absorption costing fixed production overhead is also allocated to units and it is a part of product cost Calculation of product cost Amount Note Direct materials 1200 Direct la... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
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