Duo Ltd makes and sells one product, the Alpha. The following information is available for period 3: Alpha Production (units) 2,500 Sales (units) 2,300 Opening inventory (units) 0 Financial data: Alpha (K) Unit selling price 90 Unit cost(s): Direct materials 15 Direct labour 18 Variable production overheads 12 Fixed production overheads 30 Variable selling overheads 1 Fixed production overheads for the period were K52,500 and fixed administration overheads were K13,500. Prepare a statement of profit or loss for period 3 based on: (a) Marginal costing principles. (b) Absorption costing principles
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Duo Ltd makes and sells one product, the Alpha. The following information is available
for period 3:
Alpha
Production (units) 2,500
Sales (units) 2,300
Opening inventory (units) 0
Financial data:
Alpha
(K)
Unit selling price 90
Unit cost(s):
Direct materials 15
Direct labour 18
Variable production
Fixed production overheads 30
Variable selling overheads 1
Fixed production overheads for the period were K52,500 and fixed administration
overheads were K13,500. Prepare a statement of profit or loss for period 3 based on:
(a) Marginal costing principles.
(b) Absorption costing principles.
Step by step
Solved in 2 steps with 1 images
