Management Accounting Question No TCA1-Comparing Absorption Cost And Marginal Costing

Company A for the year ending 31/12/06 produced 11,000 unit of Product X but only 10,000 units were sold at $20 each.

More data as follows:

(a) Manufacturing costs$
Direct material6 per unit
Direct labor4 per unit
Variable overheads2 per unit
Fixed overheads$22,000/year
  
(b) Selling &Distribution$

Variable cost

1.50 per unit

Fixed cost

$20,000/year

  

© General Expenses (assuming all fixed expenses)

$15,000

Assume that actual overheads = budgeted.

Question:

(a)   Prepare the Income Statement Under the Marginal Costing Approach

(b)  Prepare the Income Statement Under the Absorption Costing Approach.

 

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