TATA Ltd manufactures and sells a motor bicycLe called Papa. TATA Ltd produces Papa as the...

 

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TATA Ltd manufactures and sells a motor bicycLe called Papa. TATA Ltd produces Papa as the only product. The following information relates to the company's activities for the last two quarters for the year ended 3l't December 2018. Quarter Ended 30 Sept. 2018 31 Dec. 2018 Bicycles manufactured 3,600 3,000 Bicycles sold 3,000 3,600 There was no opening inventory on July 1, 2018 The selling price of each bicycle was K500 The following costs relate to the production of one bicycle: K Direct materials 150 Direct labour 130 Variable production overheads 20 300 Budgeted production for the year is 14.400 bicycles. Budgeted fixed production overhead for the year is K432,000, absorbed using a predetermined percentage of the total variable cost. Quarter 30 Sept. 2018 31 Dec. 2018 K K Selling overheads 16,000 14,000 Distribution overheads 10,500 11,000 Administration overhead 8,000 9,000 Required: (a) Prepare separate profit statements clearly showing the results for each quarter using: (i) Marginal costing (ii) Absorption costing (b) Reconcile the profits found by each method calculated in (a) above for the two periods separately. TATA Ltd manufactures and sells a motor bicycLe called Papa. TATA Ltd produces Papa as the only product. The following information relates to the company's activities for the last two quarters for the year ended 3l't December 2018. Quarter Ended 30 Sept. 2018 31 Dec. 2018 Bicycles manufactured 3,600 3,000 Bicycles sold 3,000 3,600 There was no opening inventory on July 1, 2018 The selling price of each bicycle was K500 The following costs relate to the production of one bicycle: K Direct materials 150 Direct labour 130 Variable production overheads 20 300 Budgeted production for the year is 14.400 bicycles. Budgeted fixed production overhead for the year is K432,000, absorbed using a predetermined percentage of the total variable cost. Quarter 30 Sept. 2018 31 Dec. 2018 K K Selling overheads 16,000 14,000 Distribution overheads 10,500 11,000 Administration overhead 8,000 9,000 Required: (a) Prepare separate profit statements clearly showing the results for each quarter using: (i) Marginal costing (ii) Absorption costing (b) Reconcile the profits found by each method calculated in (a) above for the two periods separately.

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Answer a Preparation of profit statements as per Absorption ... View the full answer