Q # 7Kabeer Manufacturing Co. uses direct costing. Following information have been received from their accounting records for a single product at the end of the year: Planned Production in units30,000Actual Production in units29,000Actual sales in units28,000 Fixed Costs (Rs.)Variable Costs (Rs.)Raw Materials 52Direct Labor 40FOH 28Fixed FOH - CostRs. 160,000 Marketing and Administrative CostingRs. 100,000Rs. 9 per unit sold Note: Selling price of each single unit is Rs. 200. Required Prepare operating income statement by both, absorption and direct costing approach.

Direct costing approach is the variable cost in which contribution is calculated after deducting…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Q # 7

Kabeer Manufacturing Co. uses direct costing. Following information have been received from their accounting records for a single product at the end of the year:

Planned Production in units	30,000
Actual Production in units	29,000
Actual sales in units	28,000

	Fixed Costs (Rs.)	Variable Costs (Rs.)
Raw Materials		52
Direct Labor		40
FOH		28
Fixed FOH - Cost	Rs. 160,000
Marketing and Administrative Costing	Rs. 100,000	Rs. 9 per unit sold

Note: Selling price of each single unit is Rs. 200.

Required

Prepare operating income statement by both, absorption and direct costing approach.

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