The following details have been extracted from KL’s budget:

The budgeted fixed production cost per unit was based on a normal Capacity of 11000 units per month.

Actual details for the months of January and February are given below:

There was no closing inventory at the end of December.
Required:
(i) Calculate the actual profit for January and February using absorption costing.
You should assume that any under / over absorption of fixed overheads is debited / credited to the Income Statement each month.
(3 marks)
(ii) The actual profit figure for the month of January using marginal costing was $532 000.
Explain, using appropriate calculations, why there is a difference between the actual profit figures for January using marginal costing and using absorption costing.
(2 marks)
CIMA P1 Performance Operations

Transcribed Image Text:

Selling price per unit Variable production costs per unit Fixed production costs per unit $140 $45 $32