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

Published by slang November 23rd, 2007 in Managerial Accounting

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 material	6 per unit
Direct labor	4 per unit
Variable overheads	2 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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