Example 3Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. Thenormal annual level of production on which the fixed production overhead absorption isbased is 120,000 crates.Data for the just ended financial year of 31 December 2018 is as follows:ProductienSalesSelling priceCosts:145,000 crates112,000 cratesGHS2,000 per crateDirect materialDirect labourVariable overheadFixed production overheadVariable selling and distribution costFixed selling and distribution costAssume no opening inventoriesRequired:Prepare profit statements for the year ended 31 December, 2018 based on(a) Marginal costing(b) Absorption costing(c) Reconcile the Profit figures in (a) and (b) above(d) Outline TWO differences between Marginal Costing and Absorption Costing6005202501,820,00010% of sales revenueGHS234,000

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Description: Example 3Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. Thenormal annual level of production on which the fixed production overhead absorption isbased is 120,000 crates.Data for the just ended financial year o

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Example 3 Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. The normal annual level of production on which the fixed production overhead absorption is based is 120,000 crates. Data for the just ended financial year of 31 December 2018 is as follows: 145,000 crates 112,000 crates GHS2,000 per crate Productien Sales Selling price Costs: Direct material Direct labour Variable overhead 600 520 250 1,820,000 10% of sales revenue Fixed production overhead Variable selling and distribution cost Fixed selling and distribution cost Assume no opening inventories Required: Prepare profit statements for the year ended 31 December, 2018 based on (a) Marginal costing (b) Absorption costing (c) Reconcile the Profit figures in (a) and (b) above (d) Outline TWO differences between Marginal Costing and Absorption Costing GHS234,000

Example 3 Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. The normal annual level of production on which the fixed production overhead absorption is based is 120,000 crates. Data for the just ended financial year of 31 December 2018 is as follows: 145,000 crates 112,000 crates GHS2,000 per crate Productien Sales Selling price Costs: Direct material Direct labour Variable overhead 600 520 250 1,820,000 10% of sales revenue Fixed production overhead Variable selling and distribution cost Fixed selling and distribution cost Assume no opening inventories Required: Prepare profit statements for the year ended 31 December, 2018 based on (a) Marginal costing (b) Absorption costing (c) Reconcile the Profit figures in (a) and (b) above (d) Outline TWO differences between Marginal Costing and Absorption Costing GHS234,000

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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