Consider the following figures: Sales £450,000 Opening stock £20,000 Closing stock £30,000 Raw materials £120,000 Direct labour £130,000 Production overhead £120,000 Administration £45,000 What is the operating profit for the period?

Consider the following figures: Sales £450,000 Opening stock £20,000 Closing stock £30,000 Raw materials £120,000 Direct labour £130,000 Production overhead £120,000 Administration £45,000 What is the operating profit for the period?

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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Question

Consider the following figures:

Sales £450,000

Opening stock £20,000

Closing stock £30,000

Raw materials £120,000

Direct labour £130,000

Production overhead £120,000

Administration £45,000

What is the operating profit for the period?

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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