Question

The following data is available regarding an organization who makes a single product.

	Period 1	Period 2	Period 3
Production (units)	15,000	18,000	20,000
Sales	14,000	16,500	22,500
Opening Stock	_	1,000	2,500
Closing Stock	1,000	2,500	_

The following cost structure applies (based on a budgeted level of 15,000 units per period).

Cost Per Unit

$

Direct Material 2

Direct Labour 6

Production Overheads 4

Selling price is $15 per unit

Administrative overheads are $15,000 per period and the budgeted production overheads are $60,000 per period of which $45,000 are fixed.

Required: Prepare separate operating statements using absorption costing and marginal costing for Period 3 only.

Answer 1