Byron Ltd commenced business on 1 January making one product only. The budgeted cost of one...

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Byron Ltd commenced business on 1 January making one product only. The budgeted cost of one unit of the product is as follows: Direct labour Direct material Variable production overhead Fixed production overhead 2018 $ 24 16 6 56 The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 48,000 units per annum. Budgeted fixed expenses are incurred evenly over the year. Selling, distribution and administration expenses are: Fixed Administration expenses $300,000 per annum Variable Selling and Distribution costs 20% of the sales value The selling price per unit is $100 and there was no opening stock at the beginning of January. The actual numbers of units produced and sold were: Production Sales Jan. Feb. units units 3,500 4,000 3,000 4,200 Actual variable costs per unit and fixed costs were as budgeted. The company uses the First-in-first-out approach to value closing stock. Required: a) Prepare profit and loss accounts for each of the months of January and February using the absorption costing approach. (12 marks) b) Prepare profit and loss accounts using marginal costing, showing clearly your calculation of contribution, for each of the months of January and February. Byron Ltd commenced business on 1 January making one product only. The budgeted cost of one unit of the product is as follows: Direct labour Direct material Variable production overhead Fixed production overhead 2018 $ 24 16 6 56 The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 48,000 units per annum. Budgeted fixed expenses are incurred evenly over the year. Selling, distribution and administration expenses are: Fixed Administration expenses $300,000 per annum Variable Selling and Distribution costs 20% of the sales value The selling price per unit is $100 and there was no opening stock at the beginning of January. The actual numbers of units produced and sold were: Production Sales Jan. Feb. units units 3,500 4,000 3,000 4,200 Actual variable costs per unit and fixed costs were as budgeted. The company uses the First-in-first-out approach to value closing stock. Required: a) Prepare profit and loss accounts for each of the months of January and February using the absorption costing approach. (12 marks) b) Prepare profit and loss accounts using marginal costing, showing clearly your calculation of contribution, for each of the months of January and February.

Answer rating: 100% (QA)

a Profit and Loss Accounts using Absorption Costing January Sales Revenue 300000 Less Cost of Goods ... View the full answer