Hajia Nania makes and sells canned Fuula which has the following standard production cost. Gh¢ Direct labour 3 hours at Gh¢ 6 per hour 18 Direct materials 4 kilogram at Gh¢ 7 per kg 28 Production overhead variable 3 Fixed 20 Standard production cost per unit 69 Normal output is 16,000 units per annum. variable selling, distribution and administration cost are 20 percent of sales values. Fixed selling, distribution and administration cost are GH¢180, 000 per annum. There are no units in finished good inventory at 1 October 2016. The fixed overhead expenditure is spread evenly throughout the year. The selling price per unit is Ghc140. Production and sales budgets are as follows Six month ending Six Month ending 31 March 2016 30 September 2016 Production 8,500 7,000 Sales 7,000 8,000 Required: Prepare profit statements for each of the six monthly periods, using the following methods Marginal costing Absorption costing
Hajia Nania makes and sells canned Fuula which has the following
Direct labour 3 hours at Gh¢ 6 per hour 18
Direct materials 4 kilogram at Gh¢ 7 per kg 28
Production overhead variable 3
Fixed 20
Standard production cost per unit 69
Normal output is 16,000 units per annum. variable selling, distribution and administration cost are 20 percent of sales values. Fixed selling, distribution and administration cost are GH¢180, 000 per annum. There are no units in finished good inventory at 1 October 2016. The fixed overhead expenditure is spread evenly throughout the year. The selling price per unit is Ghc140.
Production and sales budgets are as follows
Six month ending Six Month ending
31 March 2016 30 September 2016
Production 8,500 7,000
Sales 7,000 8,000
Required:
Prepare profit statements for each of the six monthly periods, using the following methods
- Marginal costing
- Absorption costing
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