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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

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. (4 marks)   (ii)Prepare an income statement for the year. (8 marks)   (b)Using Marginal costing:  (i)Calculate the production cost per unit. (5 marks)   (ii)Prepare an income statement for the year. 1.jpg

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