The Valley Fireworks Limited (“Valley") manufactures special firework display kits to sell toresponsible organisations only. The following information is taken from its budget for 2021:$ per unit S per annum500Selling priceDirect materials60Direct labour180Variable production overheadVariable distribution overhead1020Fixed production overheadFixed administrative overhead96,000144,000The budget is assumed that opening and closing inventory are 20 kits and annual productionequals to annual sales which are 1,200 kits. Its financial ended is on 31 December.The actual production and sales volumes for 2021 were:UnitsQ1Q2290Q3550Q4690Opening inventory10300980Production300300200Sales204060Closing inventory29055069010The variable costs per kit and the total fixed costs were as budget.Required:a. Prepare income statement of The Valley for each of the four quarters and the year of 2021under the absorption costing method.b. Prepare income statement of The Valley for each of the four quarters and the year of 2021under the variable costing method.c. Reconcile The Valley's operating income reported under absorption and variable costingfor each quarter and the year of 2021.(39 marks)(21 marks)(10 marks)

The Valley Fireworks Limited (“Valley") manufactures special firework display kits to sell to responsible organisations only. The following information is taken from its budget for 2021: Selling price Direct materials $ per unit S per annum 500 60 Direct labour 180 10 20 Variable production overhead Variable distribution overhead Fixed production overhead Fixed administrative overhead 96,000 144,000 The budget is assumed that opening and closing inventory are 20 kits and annual production equals to annual sales which are 1,200 kits. Its financial ended is on 31 December.

The Valley Fireworks Limited (“Valley") manufactures special firework display kits to sell to responsible organisations only. The following information is taken from its budget for 2021: Selling price Direct materials $ per unit S per annum 500 60 Direct labour 180 10 20 Variable production overhead Variable distribution overhead Fixed production overhead Fixed administrative overhead 96,000 144,000 The budget is assumed that opening and closing inventory are 20 kits and annual production equals to annual sales which are 1,200 kits. Its financial ended is on 31 December.

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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