You are the accountant for a company that manufactures a single product for which the following data based on a budgeted capacity of 98,000 units per month, are as follows:

Stock, output and sales data (in units)

Details	Period 1	Period 2
Sales	80,000	85,000
Opening stock	15,000	12,500
Closing stock	40,000	19,500
Production	105,000	92,000

Cost Data

Details
Direct materials	45
Direct labour	28
Variable Production O/H	45

Fixed administrative and selling overheads were estimated at $150,000 and $210,000 respectively. During the periods, the company sold one unit of its product for $180 and Total Fixed Production Overheads were $ 1,470,000.

Required:

1. Show the profit situation using marginal costing principles.
2. Show the profit situation using Absorption costing principles.
3. Reconcile the profit numbers for both periods in the question.
4. State two reasons why Absorption Costing methods may be used.
5. Calculate Total Fixed Cost for the period.
6. Calculate the breakeven point in units and sales revenue. 
7. Calculate the contribution to sales ratio.
8. Calculate the margin of safety in units.

Answer rating: 100% (QA)

a Marginal Costing Sales 80000 85000 Less Variable costs Direct materials 45 Direct labour 28 Variab... View the full answer