Woolcock Toys Ltd. is a firm that produces stuff toys at the Montego Bay Free Zone. Details of the expected number of stuff toys to be produced and sold for the last two months of the calendar year 2013 are budgeted as follows: Month ending November 30, 2013 month ending December 31, 2013 Production 13,000 15,000 Sales 12,000 16,000 The selling price is $70.00 and the standard production cost per toy is as follows: Direct Material $14.00 Direct Labour $ 9.00 Variable Production overhead $ 3.00 Fixed Production Overhead $10.00 Total cost $36.00 Normal output is 56,000 units per annum and this amount is used for the calculation of the actual fixed production overhead. Fixed production overhead accounts for the only production overhead variance. Fixed overhead expenditure and the production of stuffed toys are spread evenly throughout the year. 

There should be no finished toys on September 1, 2013 Marketing and administrative cost are as follows: Variable 15% of sales revenue Fixed $480,000 per annum. 

Required: 

Prepare the income statements for the months ending November 30, 2013, and December 31, 2013, on the basis of Marginal costing. 

Explain briefly the situations in which marginal costing aids in decision-making.

Answer rating: 100% (QA)

a Income statement for the month ending November 30 2013 Sales 1200070840... View the full answer