108,000 units next year. J
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...
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Question
Jaime Ltd manufactures and sells a small electric product to order for the computer industry.
The estimated selling price and variable costs per unit for next year are as follows:
(£ per unit)
Selling price 654.00
Variable costs:
Direct materials 216.00
Direct labour 108.00
Production overhead 54.00
Selling & distribution overhead 27.00
Jaime Ltd expects to sell 108,000 units next year. Jaime Ltd expects the stock level at the start
of the year to be NIL and the stock at the end of the year to be 18,000 units. Information on
fixed costs is as follows:
Fixed costs: £
Production overhead 1,452,000
Selling & distribution 360,000
Administration overhead 342,000
Required:
(a) Using absorption costing:
(i) Calculate the production cost per unit. (4 marks)
(ii) Prepare an income statement for the year. (8 marks)
(b) Using Marginal costing:
6
(i) Calculate the production cost per unit. (5 marks)
(ii) Prepare an income statement for the year.
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