Homework Help is Here – Start Your Trial Now!
Business
Accounting
QUESTION SIX a) Explain the difference between absorption costing and marginal costing (6 marks) b) Alan Ltd. the producer of a single mile product has provided the following cost structure data based on the normal or budgeted level of output of 60,000 litres Cost per unit in Euros 8 Material cost Direct labour 6 Variable overheads 10 Selling and distribution costs per unit 4 Fixed manufacturing overheads 8 Total 36 Page 4 of 5 At the beginning of production the company had inventory amounting 20,000 litres whose value is based on the above cost structure. Budgeted selling and administration overheads amount to £200,000. The company sells the products at £50 per unit. The production and sells are as follows; Production (units) Sales (units) Required: 45,000 50,000 (i) Produce Allan Ltd. profit statements based on the absorption costing technique and marginal costing technique. (16 marks) (ii) Using your results in i) above reconcile the profits computed under absorption and marginal costing technique. (3 marks)

QUESTION SIX a) Explain the difference between absorption costing and marginal costing (6 marks) b) Alan Ltd. the producer of a single mile product has provided the following cost structure data based on the normal or budgeted level of output of 60,000 litres Cost per unit in Euros 8 Material cost Direct labour 6 Variable overheads 10 Selling and distribution costs per unit 4 Fixed manufacturing overheads 8 Total 36 Page 4 of 5 At the beginning of production the company had inventory amounting 20,000 litres whose value is based on the above cost structure. Budgeted selling and administration overheads amount to £200,000. The company sells the products at £50 per unit. The production and sells are as follows; Production (units) Sales (units) Required: 45,000 50,000 (i) Produce Allan Ltd. profit statements based on the absorption costing technique and marginal costing technique. (16 marks) (ii) Using your results in i) above reconcile the profits computed under absorption and marginal costing technique. (3 marks)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
QUESTION SIX a) Explain the difference between absorption costing and marginal costing (6 marks) b) Alan Ltd. the producer of a single mile product has provided the following cost structure data based on the normal or budgeted level of output of 60,000 litres Cost per unit in Euros 8 Material cost Direct labour 6 Variable overheads 10 Selling and distribution costs per unit 4 Fixed manufacturing overheads 8 Total 36 Page 4 of 5
Transcribed Image Text:QUESTION SIX a) Explain the difference between absorption costing and marginal costing (6 marks) b) Alan Ltd. the producer of a single mile product has provided the following cost structure data based on the normal or budgeted level of output of 60,000 litres Cost per unit in Euros 8 Material cost Direct labour 6 Variable overheads 10 Selling and distribution costs per unit 4 Fixed manufacturing overheads 8 Total 36 Page 4 of 5
At the beginning of production the company had inventory amounting 20,000 litres whose value is based on the above cost structure. Budgeted selling and administration overheads amount to £200,000. The company sells the products at £50 per unit. The production and sells are as follows; Production (units) Sales (units) Required: 45,000 50,000 (i) Produce Allan Ltd. profit statements based on the absorption costing technique and marginal costing technique. (16 marks) (ii) Using your results in i) above reconcile the profits computed under absorption and marginal costing technique. (3 marks)
Transcribed Image Text:At the beginning of production the company had inventory amounting 20,000 litres whose value is based on the above cost structure. Budgeted selling and administration overheads amount to £200,000. The company sells the products at £50 per unit. The production and sells are as follows; Production (units) Sales (units) Required: 45,000 50,000 (i) Produce Allan Ltd. profit statements based on the absorption costing technique and marginal costing technique. (16 marks) (ii) Using your results in i) above reconcile the profits computed under absorption and marginal costing technique. (3 marks)
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS