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

Selling price per unit $140 Variable production costs per unit $45 Fixed production costs per unit $32 The budgeted fixed production cost per unit was based on a normal capacity of 11.000 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:
(}) 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)
(i) 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 Pi Performance Operations

Transcribed Image Text:

January February Production volume (units) 10000 11500 Sales volume (units) 9800 11200 Selling price per unit $135 $140 Variable production cost per unit $45 $45 Total fixed production costs $350000 $340000