Jaime Ltd manufactures and sells a small electric product to order for the computer industry. The estimated selling price and variable costs per unit for next year are as follows: (£ per unit) 

Selling price 654.00 

Variable costs: 

Direct materials 216.00 

Direct labour 108.00 

Production overhead 54.00 

Selling & distribution overhead 27.00 

Jaime Ltd expects to sell 108,000 units next year. 

Jaime Ltd expects the stock level at the start of the year to be NIL and the stock at the end of the year to be 18,000 units. Information on fixed costs is as follows: 

Fixed costs: £ 

Production overhead 1,452,000 

Selling & distribution 360,000 

Administration overhead 342,000 

Required: 

(a) Using absorption costing: 

(i) Calculate the production cost per unit. 

(ii) Prepare an income statement for the year. (8 marks)

Answer rating: 100% (QA)

Part ai production cost per unit absorption costing dire... View the full answer