Homework Answers
(a) Absorption Costing
| Product Cost | |||
| Period 1 | Period 2 | Period 3 | |
| Direct Materials | $ 7,500,000 | $ 6,000,000 | $ 8,250,000 |
| Direct Labor | $ 3,000,000 | $ 2,400,000 | $ 3,300,000 |
| Variable Manufacturing Overhead | $ 1,500,000 | $ 1,200,000 | $ 1,650,000 |
| Fixed Manufacturing Overhead | $ 6,000,000 | $ 6,000,000 | $ 6,000,000 |
| Total manufacturing Cost | $ 18,000,000 | $ 15,600,000 | $ 19,200,000 |
| Units Produced | 10000 | 8000 | 11000 |
| Product Cost per unit | $ 1,800.00 | $ 1,950.00 | $ 1,745.45 |
| Period 1 | Period 2 | Period 3 | |
| Sales Revenue | $ 19,200,000 | $ 21,600,000 | $ 28,800,000 |
| Cost of Goods Sold | |||
| Beginning Inventory | $ - | $ 3,600,000 | $ 1,950,000 |
| Plus Cost of Goods Manufactured | $ 18,000,000 | $ 15,600,000 | $ 19,200,000 |
| Less Ending Inventory | $ 3,600,000 | $ 1,950,000 | $ - |
| Cost of Goods Sold | $ 14,400,000 | $ 17,250,000 | $ 21,150,000 |
| Gross Margin | $ 4,800,000 | $ 4,350,000 | $ 7,650,000 |
Ending Inventory = Units in ending inventory x Product cost per unit for Period
(b) Marginal Costing
| Period 1 | Period 2 | Period 3 | |
| Direct Materials | $ 750 | $ 750 | $ 750 |
| Direct Labor | $ 300 | $ 300 | $ 300 |
| Variable Manufacturing Overhead | $ 150 | $ 150 | $ 150 |
| Product Cost per unit | $ 1,200 | $ 1,200 | $ 1,200 |
| Period 1 | Period 2 | Period 3 | |
| Sales | $ 19,200,000 | $ 21,600,000 | $ 28,800,000 |
| Cost of Goods Sold | |||
| Beginning Inventory | $ - | $ 2,400,000 | $ 1,200,000 |
| Plus Cost of Goods Manufactured | $ 12,000,000 | $ 9,600,000 | $ 13,200,000 |
| Less Ending Inventory | $ 2,400,000 | $ 1,200,000 | $ - |
| Cost of Goods Sold | $ 9,600,000 | $ 10,800,000 | $ 14,400,000 |
| Contribution Margin | $ 9,600,000 | $ 10,800,000 | $ 14,400,000 |
| Fixed Manufacturing OH | $ 6,000,000 | $ 6,000,000 | $ 6,000,000 |
| Operating Income | $ 3,600,000 | $ 4,800,000 | $ 8,400,000 |
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plz solve step by step in a full format. Question #1 ABC Ltd is considering using...
plz solve step by step in a full format.
Question #1 ABC Ltd is considering using direct costing method for decision making instead of absorption costing method. Following data has been summarized for that purpose: Units Units RS 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...
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Question #6 Modem Metal Works details in German Silver Sets; the standard production cost of which is as under: RS. 4kg @ Rs.35 3 Hrs @ Rs.30 Direct material Direct labour F.O.H. Variable Fixed Total cost 140 90 15 100 345 Normal output is 16,000 units per annum, costs relating to selling, distribution and administration are: MARGINAL AND ABSORPTION COSTING 5 Variable 20% of sales value Fixed Rs.900,000 per annum The only variance is fixed...
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plz solve step by step in a full format.
Question #1 ABC Ltd is considering using direct costing method for decision making instead of absorption costing method. Following data has been summarized for that purpose: Units Units RS 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...
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Question #7 A manufacturer produces and sells single product. Summarized data of operations for two years are given below. Rs. Selling price per unit 4,000 Manufacturing costs: Variable cost per unit: Direct materials 880 Direct labour 480 Variable overhead 240 Fixed cost per year 9,600,000 Selling and administrative costs: Variable (per unit sold) 400 Fixed cost per year 5,600,000 MARGINAL AND ABSORPTION COSTING 6 Year 1 Beginning inventory - units Units produced Units sold Ending...
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Question #9 Flexible budget for a product as prepare by Anchor Ltd, is given below: 15,000 Rs. 1.200,000 20,000 Rs. 1,600,000 Sales - unit 10,000 Rs. Sales 800,000 Manufacturing cost: Variable 300,000 Fixed 200,000 Total manufacturing cost 500,000 Marketing and other expenses Variable 200,000 Fixed 160,000 Total Marketing and other expense 360,000 Operating income / (loss) (60,000) 450,000 200,000 650,000 600,000 200,000 800,000 300,000 160,000 460,000 90,000 400,000 160,000 560,000 240,000 Additional information: • The...
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