TLC Manufacturing Ltd is considering whether to use marginal or absorption costing to report its budgeted profit
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Question:
TLC Manufacturing Ltd is considering whether to use marginal or absorption costing to report its budgeted profit in its management accounts.
The following information is available:
Variable Prod Cost - $ 36 per unit
Fixed Prod - (OAR) $ 83.75 per unit
Selling price - $ 170 per unit
Actual fixed production overheads incurred is $ 200 000 per month.
Sales for the month are expected to be 2 000 units while production units will be 2 500 units.
There is no opening stock.
Fixed selling cost will be $ 10 000 and also there will be variable selling cost of $ 9 875 in total.
As the cost Accountant you are required to complete the absorption costing report below to advise management on the estimated profit using absorption costing principles.
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