Calculate the standard cost per unit and standard profit per unit under absorption costing principles. (b) Prepare a profit statement for each month ( separately) on each of the following basis: i. Absorption costing ii. Marginal costing (c) Prepare a reconciliation of the difference in profit reported in the profit statements prepared in part (b) above.
Tannian Ltd has produced the following budgeted figures for a new product which it hopes to launch:
Direct material N$10 per unit
Direct labour N$5 per unit
Variable production
Fixed production overhead N$27 000 per month
Budgeted output 9000 units per month
Selling price N$30 per unit
The following levels of activity took place over the first two months of the products life:
| Month 1 | Month 2 | |
| Production units | 9000 | 10 000 |
| Sales units | 8500 | 9500 |
Note: Actual prices and costs were the same as budgeted for the first two months.
Required:
(a) Calculate the
(b) Prepare a profit statement for each month ( separately) on each of the following basis:
i. Absorption costing
ii. Marginal costing
(c) Prepare a reconciliation of the difference in profit reported in the profit statements prepared in part (b) above.
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