Question 4. Flopper Engines Ltd assembles and sells ship engines. In September and October 2016, the selling price per engine was £15,000. Further data for October and September are: September October Unit data Opening inventory 100 Production 250 250 Sales 150 290 Variable cost data Manufacturing cost per unit £6,800 £6,800 Fixed cost data Manufacturing costs Marketing costs £850,000 £250,000 £850,000 £250,000 REQUIRED: Calculate the operating income for September using (a) (b) (c) Variable (marginal) costing Full (absorption) costing Explain why there is a difference in profit between the two costing approaches. Why might the manager of the Mountain Climbing division prefer one method over the other when preparing his internal report to the CFO?

Question 4. Flopper Engines Ltd assembles and sells ship engines. In September and October 2016, the selling price per engine was £15,000. Further data for October and September are: September October Unit data Opening inventory 100 Production 250 250 Sales 150 290 Variable cost data Manufacturing cost per unit £6,800 £6,800 Fixed cost data Manufacturing costs Marketing costs £850,000 £250,000 £850,000 £250,000 REQUIRED: Calculate the operating income for September using (a) (b) (c) Variable (marginal) costing Full (absorption) costing Explain why there is a difference in profit between the two costing approaches. Why might the manager of the Mountain Climbing division prefer one method over the other when preparing his internal report to the CFO?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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