Question 1The following data relates to periods 1 to 4 of a manufacturing company producing a singleproduct: -(RM)Variable cost per unitSelling price per unitFixed overhead per period30606,000Normal activity is 500 units and production and sales for the four periods are as follows: -Period 1 unitsPeriod 2 unitsPeriod 3 unitsPeriod 4 unitsSales500450500450400Production 500500500There were no opening stocks at the start of period 1.Required:(a) Prepare a profit statement for each of the periods 1 to 4, based on the variable costingsystem.(b) Prepare a profit statement for each of the periods 1 to 4, based on the traditionalabsorption costing system.(c) Assume that this manufacturing company makes Christmas decorative. If you are themanagement accountant, explain briefly the impact of sales and production cost ofsuch a product on profits if (1) absorption costing, or (ii) variable costing is adopted,and propose which costing system is most suitable here.

Variable Costing System: Under variable costing system, only variable production costs are…

Question 1 The following data relates to periods 1 to 4 of a manufacturing company producing a single product: - (RM) Variable cost per unit Selling price per unit Fixed overhead per period 30 60 6,000

Question 1 The following data relates to periods 1 to 4 of a manufacturing company producing a single product: - (RM) Variable cost per unit Selling price per unit Fixed overhead per period 30 60 6,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 3BE: Variable costingsales exceed production The beginning inventory is 52,800 units. All of the units...

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QUESTION 1 QUESTION 1: VARIABLE COSTING QUESTION Bairstow Company manufactures and sells a single product. The following costs were incurred during 2021, the company’s first year of operations: Variable Costs per unit: Production: Direct materials $ 6.00 Direct labour $ 9.00 Variable Manufacturing Overhead $ 3.00 Selling and administrative $ 4.00 FIXED COSTS PER YEAR Manufacturing Overhead $ 300,000 Selling and administrative $ 190,000 During 2021, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $ 50 per unit. Required: 1. Assume that the company uses the absorption costing method: Compute the cost to produce one unit of product. Prepare an income statement for 2021 2. Assume the company uses the variable costing method: a. Compute the cost to produce one unit of product. b. Prepare an…
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