Question

b) Using the information provided below, calculate the closing stock valuations and the profit figures for...

b) Using the information provided below, calculate the closing stock valuations and the profit figures for Product Z under both Absorption Costing principles and Variable Costing principles. Product Z: Annual production (units) 31,000 Units sold during the period 25,000 Costs: Direct materials per unit €10 Direct labour per unit €21 Administration expenses for period €15,000 Overheads incurred: Power and maintenance (variable) €24,000 Other factory overheads (fixed) €36,000 Other information: Selling price per unit €40 Total machine hours per annum 12,000 hours Machine time per unit 1 hou

Homework Answers

Answer #1
Units Produced 31000
Units sold 25000
Cost per unit
Absorption Variable
Direct Material per unit 10 10
Direct Labour per unit 21 21
Variable manufacturing overhead (24000/31000) 0.77 0.77
Fixed manufacturing overhead (36000/31000) 1.16
Total cost per unit 32.94 31.77
Closing stock Valuation (6000 x 32.94)(6000x31.77) 197613 190645
Profit
Sales 1000000 1000000
Cost of goods sold 823387
Variable cost of goods sold 794355
Gross Profit 176613
Contribution Margin 205645
Less:Fixed Cost
Fixed manufacturing overhead 36000
Administrative expenses 15000 15000
Operating Profit 161613 154645
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