ABC Ltd is considering using direct costing method for decision making instead of absorption costing method....

 

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ABC Ltd is considering using direct costing method for decision making instead of absorption costing method. Following data has been summarized for that purpose: Annual Maximum Plant capacity Annual Normal Plant capacity Fixed Factory overhead for the year Fixed Marketing Expenses for the year Fixed Administrative expenses for the year Sales price per unit Standard variable manufacturing cost per unit Variable marketing expenses per unit sold Budgeted production for the year Actual production for the year Sales for the year Opening finished goods inventory Units 50,000 Units 40,000 Rs. 500,000 Rs. 100,000 Rs. 150,000 Rs. 1,000 Rs. 400 Rs. 100 Unit 40,000 Unit 30,000 Unit 28,000 Unit 1,000 Required: (a) Income statement for the year under direct method. (b) Operating income for the year if absorption costing had been used. ABC Ltd is considering using direct costing method for decision making instead of absorption costing method. Following data has been summarized for that purpose: Annual Maximum Plant capacity Annual Normal Plant capacity Fixed Factory overhead for the year Fixed Marketing Expenses for the year Fixed Administrative expenses for the year Sales price per unit Standard variable manufacturing cost per unit Variable marketing expenses per unit sold Budgeted production for the year Actual production for the year Sales for the year Opening finished goods inventory Units 50,000 Units 40,000 Rs. 500,000 Rs. 100,000 Rs. 150,000 Rs. 1,000 Rs. 400 Rs. 100 Unit 40,000 Unit 30,000 Unit 28,000 Unit 1,000 Required: (a) Income statement for the year under direct method. (b) Operating income for the year if absorption costing had been used.

Answer rating: 100% (QA)

Answer Ans A Income statement under Direct costing Marginal costing Particulars Rs Rs Sales 28000 un... View the full answer