Fundamentals of Cost and Management Accounting (Study Text) 165 | P a g e Example Company A produces a single product with the following budget: Selling price Rs 10 Direct materials Rs 3 per unit Direct wages Rs 2 per unit Variable production overhead Re 1 per unit Fixed production overhead Rs 10,000 per month. The fixed overhead absorption rate is based on volume of 5,000 units per month. There was production of 6000units i.e 4,800 units were sold and 1200 units left in closing stock. Prepare the profit statement for the month under absorption costing.

Fundamentals of Cost and Management Accounting (Study Text) 251 | P a g e Product A Product B Units of output 2,000 8,000 Price per unit Rs 5 Rs 2.50 Required: Calculate the cost of sales, and gross profit for products A and B assuming: (i) Joint costs are apportioned by market value (ii) Joint costs are apportioned by production units.

Required informationUse the following information for the Exercise below. (Algo)Skip to question[The following information applies to the questions displayed below.]Trio Company reports the following information for its first year of operations. Direct materials $ 16 per unitDirect labor $ 20 per unitVariable overhead $ 7 per unitFixed overhead $ 390,450 per yearUnits produced 20,550 unitsUnits sold 15,500 unitsEnding finished goods inventory 5,050 unitsExercise 19-1 (Algo) Computing unit and inventory costs under absorption costing LO P11. Compute the product cost per unit using absorption costing.2. Determine the cost of ending finished goods inventory using absorption costing.3. Determine the cost of goods sold using absorption costing.

Industrial Dynamics reported a marginal costing profit of $28,000 for the year. During the same period, there was a decrease in inventory of 500 units. The fixed production overhead absorption rate was calculated at $10 per unit. Additionally, variable selling costs amounted to $4,000 and fixed distribution costs totalled $2,000 for the period.Calculate the Absorption Costing Profit.

A company sells a product for Rs 10 per unit, and incurs Rs 4 per unit for variable costs in its manufacture. The fixed costs are Rs 900 per month and are absorbed on the basis of the normal production volume of 250 units per month. The activity levels for the last four months, when no expenditure variances arose, were as follows: Fundamentals of Cost and Management Accounting (Study Text) 170 | P a g e 1st month units 2nd month units 3rd month units 4th month units Total units Opening stock – 200 300 300 – Production 300 250 200 200 950 ___ ___ ___ ___ ___ 300 450 500 500 950 Closing stock 200 300 300 200 200 ___ ___ ___ ___ ___ Sales 100 150 200 300 750 ___ ___ ___ ___ ___ make The profit statement using absorption costing .

Using the information below, what would be the profit under variable costing and absorption costing, respectively?Sales $120,000Units Produced 35,000Units Sold 33,260Budgeted and actual fixed overhead cost $84,000Direct manufacturing cost $21,000Selling and administrative expenses $6,000