QUESTION 8 Records from Dan Vee Ltd for the year ended December 31, 2020 revealed these extract: GHE Sales 2,600,000 Direct materials 800,000 Direct labour 600,000 Factory overhead (65% fixed) 300,000 Selling costs (25% variable) 300,000 Distribution costs (25% variable) 200,000 Administrative costs (80% fixed) 100,000 Units produced and sold 40,000 You are required to prepare an income statement for the period, using i. Marginal costing approach ii. Absorption costing approach QUESTION 9 A company which has been in existence for several years manufactures a single product with a unit selling price of GH34. Production and sales volumes of the product over a three month period have been: Month 1 2 3 Production (units) 12,000 10,500 10,000 Sales (units) 12,000 10,000 10,500 Total production cost per unit over the three month period was GH23.75, GH25 and GH25.50 respectively. Variable production costs per unit and fixed production costs per month were the same throughout the period. Selling and administrative overheads totaled GH87,000 in each month. (a) Calculate the variable production cost per unit and fixed production cost per month, over the three month period. (b) Estimate the total cost that would be incurred in month 4 if 12,500 units are manufactured. (c) Prepare a profit statement for month 2 using the absorption costing method. Assume that the fixed production overheads absorption rate is based upon normal production of 12,000 units per month. (d) Prepare a profit statement for month 3 using the marginal costing method. (e) Explain with supporting figures, the profit difference in month 2 if the marginal costing method had been used instead of the absorption costing method. QUESTION 10 UPSA Ltd commenced business on 1st July 2020 as a manufacturer of bolt and nut at the Heavy Industrial Area for the use of mechanics. The standard cost of a bolt and nut is as follows: GH Direct material 8 Direct labour 5 2 Variable production overhead Fixed production overhead 5 20 The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 36,000 units per year. You are to assume that all the budgeted fixed expenses are incurred evenly over the year. July and August are to be taken as equal period months. Selling, distribution and administrative expenses are as follows: Fixed GH1,200 per month Variable 15% of sales value The selling price per unit is GH40 and the number of units produced and sold for the month of July and August, 2020 is as shown below: 10/18 July August Production 2,000 3,200 Sales 1,500 3,000 Required: (a) Prepare profit statement for the months of July and August, 2020 using i. Marginal costing ii. Absorption costing (b) Prepare a statement reconciling the profit or loss figures in your answer a(i) and a(ii). QUESTION 11 (a) Outline five (5) advantages of an Imposed style of budgeting. (b) Outline three (3) advantages of a Participative style of budgeting. (c) Outline three(3) advantages and three (3) disadvantages of a Zero-based budgeting approach. (d) Outline three (3) advantages and three (3) disadvantages of Rolling budgets. (e) Outline five (5) sources of information for budgeting. (f) Explain briefly five (5) approaches to budgeting (g) Discuss the processes involved in Zero-based budgeting (h) Discuss ten (10) purposes or reasons for preparing budgets. (i) Define budget manual and outline five (5) information contained in a budget manual