Question 1

ECD Ltd has managers who are trying to find the two ways of calculating product cost and income statement . these are the variable costing and absorption costing methods

Selected data for ECD Ltd are presented below

Answers should be handwritten and posted in PDF file

All answers should be similar to the answers provided in the

example given in review question [NEAT and READABLE]

Any answer given after the due date and time will be marked

at 70%

Product X

Hour rate for direst labour

$ 25

Materials used in production [direct]

$ 10,500

Produced units during this period

450

Sales [ in units ]

3000

Selling price

$16.50

Variable overhead [VOH]

$ 3400

Fixed overhead [ FOH]

$ 3500

Non manufacturing cost

Variable selling

$ 4000

Fixed selling cost

$ 6500

Variable admin cost

$2400

Fixed admin cost

$1700

Ending inventory

$870

Beginning Inventory

$1750

REQUIRED

1. Calculate product cost of product X using variable cost .

2. Calculate variable cost of goods for the year

3. Find the variable-costing net income

4. Calculate product cost of product X using absorption cost .. 5. Calculate cost of goods for the year using absorption method 6. Find the net income using absorption method