Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:   Fixed cost:   Fixed Manufacturing overhead Rs     40,000 Fixed Selling & Administrative  Rs     60,000     Selling Price per unit Rs 100     Variable cost per unit:   Direct Materials Rs 30 Direct labor          Rs 10 Variable Manufacturing Overhead Rs 5 Variable Selling & Administrative Rs 2     Units In beginning Inventory                   0 Units Produced 2000 Units sold 1900   Required: a. Compute the unit product cost under both absorption and variable costing.(0.5 Marks) b. Prepare an income statement for the year using absorption costing.( 0.75 Marks) c. Prepare a contribution format income statement for the year using variable costing.             (0.75 Marks) Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year. (0.5 Marks)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:

 

Fixed cost:

 

Fixed Manufacturing overhead

Rs     40,000

Fixed Selling & Administrative

 Rs     60,000

 

 

Selling Price per unit

Rs 100

 

 

Variable cost per unit:

 

Direct Materials

Rs 30

Direct labor

         Rs 10

Variable Manufacturing Overhead

Rs 5

Variable Selling & Administrative

Rs 2

 

 

Units In beginning Inventory

                  0

Units Produced

2000

Units sold

1900


 
Required:

a. Compute the unit product cost under both absorption and variable costing.(0.5 Marks)
b. Prepare an income statement for the year using absorption costing.( 0.75 Marks)
c. Prepare a contribution format income statement for the year using variable costing.             (0.75 Marks)

  1. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year. (0.5 Marks)
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