ABSORPTION AND DIRECT COSTING Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year: Planned Production in units30,000Actual Production in units29,000Actual sales in units28,000 Fixed Costs (Rs.)Per unit Variable Costs (Rs.)Raw Materials 52Direct Labor 40Variable FOH 28Fixed FOH - CostRs. 159,500 Marketing and Administrative CostingRs. 500,000 Note: Selling price of each single unit is Rs. 200. Required Prepare operating income statement under Absorption Costing Approach.

Given information: Actual production in units = 29,000 Actual units sold = 28,000

Answered: ABSORPTION AND DIRECT COSTING Iqbal…

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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ABSORPTION AND DIRECT COSTING

Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year:

Planned Production in units	30,000
Actual Production in units	29,000
Actual sales in units	28,000

	Fixed Costs (Rs.)	Per unit Variable Costs (Rs.)
Raw Materials		52
Direct Labor		40
Variable FOH		28
Fixed FOH - Cost	Rs. 159,500
Marketing and Administrative Costing	Rs. 500,000

Note: Selling price of each single unit is Rs. 200.

Required

Prepare operating income statement under Absorption Costing Approach.

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