Answered: A company produces and sells one…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 25E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...

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A company produces and sells one product only which sells for $50 per unit. There were no stocks at the end of May and other information is as follows: standard cost per unit: $ direct material 18 direct wages 4 variable production overhead 3 budgeted and actual costs per month: fixed production overhead 99,000 fixed selling expenses 14,000 fixed administration expenses 26,000 variable selling expenses 10% of sales value normal capacity is 11,000 units per month. the number of units produced and sold was: june july units units sales 12,800 11,000 production 14,000 10,200 Required: Using the information above, prepare profit statements for June and July using: (a) Marginal costing (b) Absorption costing

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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