The following details have been extracted from EECL’s budgets. Selling price per unit £140 Variable production costs per unit £45 Fixed costs per unit £32 The budgeted fixed production cost per unit was based on a normal capacity of 11,000 units per month. Actual details for the months of January and February are given below- January February ----------------------------------------------------------------------------------------------------------- Production volume units 10000 11500 Sales volume units 9800 11200 Selling price per unit 135 140 Variable production cost per unit 45 45 Total fixed production costs 350,000 340,000 There was no closing inventory at the end of the month. Required: 1) required to produce an income statement to calculate the actual profit for January and February using absorption costing. assume that any under/over absorption of fixed overheads is debited /credited to the income statement each month. 2)The actual profit figure for the month of January using marginal costing was £532,000. Using appropriate calculations, state why there is a difference between the actual profit figures for January using marginal costing and absorption costing. please calculate marginal and absorption costing income statements along with workings
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following details have been extracted from EECL’s budgets.
Selling price per unit £140
Variable production costs per unit £45
Fixed costs per unit £32
The budgeted fixed production cost per unit was based on a normal capacity of 11,000 units per month.
Actual details for the months of January and February are given below-
January February
-----------------------------------------------------------------------------------------------------------
Production volume units 10000 11500
Sales volume units 9800 11200
Selling price per unit 135 140
Variable production cost per unit 45 45
Total fixed production costs 350,000 340,000
There was no closing inventory at the end of the month.
Required:
1) required to produce an income statement to calculate the actual profit for January and February using absorption costing. assume that any under/over absorption of fixed
2)The actual profit figure for the month of January using marginal costing was £532,000. Using appropriate calculations, state why there is a difference between the actual profit figures for January using marginal costing and absorption costing.
please calculate marginal and absorption costing income statements along with workings
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