Question 1The following data relates to periods 1 to 4 of a manufacturing company producing a singleproduct: -(RM)Variable cost per unitSelling price per unitFixed overhead per period30606,000Normal activity is 500 units and production and sales for the four periods are as follows: -Period 1 unitsPeriod 2 unitsPeriod 3 unitsPeriod 4 unitsSales500450500450400Production 500500500There were no opening stocks at the start of period 1.Required:(a) Prepare a profit statement for each of the periods 1 to 4, based on the variable costingsystem.(b) Prepare a profit statement for each of the periods 1 to 4, based on the traditionalabsorption costing system.(c) Assume that this manufacturing company makes Christmas decorative. If you are themanagement accountant, explain briefly the impact of sales and production cost ofsuch a product on profits if (1) absorption costing, or (ii) variable costing is adopted,and propose which costing system is most suitable here.

Variable Costing System: Under variable costing system, only variable production costs are…

Question 1 The following data relates to periods 1 to 4 of a manufacturing company producing a single product: - (RM) Variable cost per unit Selling price per unit Fixed overhead per period 30 60 6,000

Question 1 The following data relates to periods 1 to 4 of a manufacturing company producing a single product: - (RM) Variable cost per unit Selling price per unit Fixed overhead per period 30 60 6,000

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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