The following information was provided by Sibongile (Pty) Ltd for Product Alpha. This information relates to the
Question:
The following information was provided by Sibongile (Pty) Ltd for Product Alpha. This information relates to the second quarter, which has just ended. Budgeted production was 90 000 units and 100 000 units were actually produced. Production units are budgeted based on the company’s normal capacity. Fixed manufacturing overheads of R720 000 and variable manufacturing costs of R4,5 million were budgeted per quarter. The actual fixed and variable manufacturing costs were R636 000 and R5 million for the second quarter respectively. Product Alpha was sold at R144 per unit. Fixed manufacturing overheads were absorbed at a predetermined rate per unit. Sales units were budgeted at 65 000 units however the actual units sold were 85 000.
At the beginning of the second quarter the opening inventory was 4 000 units, valued at R50 per unit variable costs and R10 per unit fixed overheads. The company uses First in First out (FIFO) as a method of valuing its inventory.
Using the stated method of valuing finished goods inventory, calculate the actual net profits earned by Sibongile (Pty) Ltd in the second quarter using the below costing systems:
(Enter income as positive numbers and expenses as negative number)
a. Actual absorption costing profit statement
Fixed overheads absorption rate: R Answer per unit
Absorption costing statement | ||
---|---|---|
Sales | RAnswer | |
Less: Cost of sales | RAnswer | |
Opening stock | RAnswer | |
Production | RAnswer | |
Closing stock | RAnswer | |
Under/ over-recovery | RAnswer | |
Profit | RAnswer |
b. Actual marginal costing profit statement
Marginal costing statement | ||
---|---|---|
Sales | RAnswer | |
Cost of Sales | RAnswer | |
Opening stock | RAnswer | |
Production | RAnswer | |
Closing stock | RAnswer | |
Contribution | RAnswer | |
Fixed Costs | RAnswer | |
Profit | RAnswer |
c. Perform a reconciliation of the actual absorption costing profit (loss) to the actual marginal costing profit (loss) (2 marks)
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain