Zack Ltd makes and sells one product, the standard production cost of which is as follows for one unit: $ Direct materials 6 kilograms at $5 per kg 30 Direct labour 2 hours at $6 per hour 12 Production Overhead: Variable 14 Fixed 18 Standard production cost 74 Selling Price 110 Profit 36 Fixed Production $450,000 Based on 25,000 units There is no opening inventory at the start of March March April Sales 22,500 23,800 Production 25,800 23,700 Required: (a) Prepare statements for management showing sales, costs, and profits for each of the month, March and April periods, using: (i) Marginal costing (ii) Absorption costing (b) Reconcile the profits for March and April.
Zack Ltd makes and sells one product, the
|
|
$ |
|
Direct materials 6 kilograms at $5 per kg |
30 |
|
Direct labour 2 hours at $6 per hour |
12 |
|
Production |
14 |
|
Fixed |
18 |
|
Standard production cost |
74 |
|
Selling Price |
110 |
|
Profit |
36 |
Fixed Production $450,000
Based on 25,000 units
There is no opening inventory at the start of March
|
|
March |
April |
|
Sales |
22,500 |
23,800 |
|
Production |
25,800 |
23,700 |
|
|
|
|
Required:
(a) Prepare statements for management showing sales, costs, and profits for each of the month, March and April periods, using:
(i) Marginal costing
(ii) Absorption costing
(b) Reconcile the profits for March and April.
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