Virgin Ltd manufactures a single product with the following details: Per Unit GH¢ Selling Price 180 Direct materials 40 Direct Labour 16 Variable Overheads 10 Annual fixed production overheads are budgeted to be GH¢1,600,000 and the company expects to produce 1,280,000 units each year. Overheads are absorbed on a per unit basis. Actual overheads incurred for the year amounted to GH¢1,600,000. Budgeted fixed selling costs are GH¢320,000 per quarter. Actuals units sold for the first quarter of 2019 was 240,000 whiles actual production was 280,000. There were no opening Inventory at the beginning of January Required: Prepare Income statement for the first quarter of 2019 Using Marginal and Absorption Costing.
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.
Virgin Ltd manufactures a single product with the following details:
Per Unit GH¢
Selling Price 180
Direct materials 40
Direct Labour 16
Variable
Annual fixed production overheads are budgeted to be GH¢1,600,000 and the company expects to produce 1,280,000 units each year.
Overheads are absorbed on a per unit basis. Actual overheads incurred for the year amounted to GH¢1,600,000.
Budgeted fixed selling costs are GH¢320,000 per quarter.
Actuals units sold for the first quarter of 2019 was 240,000 whiles actual production was 280,000. There were no opening Inventory at the beginning of January
Required:
Prepare Income statement for the first quarter of 2019 Using Marginal and Absorption Costing.
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