Intermediate: Preparation of variable and absorption costing profit statement The unit cost of production for a firm which produces a smgle product is:

The fixed overhead calculation is based on budgeted level of activity of 150 000 units and budgeted manufacturing fixed overheads of £150000 for each quarter. The budgeted selling and administration overheads are £100 000 per quarter (all fixed). The selling price for the product is £10 per unit. The production and sales for each quarter were:

There was no opening stock in Quarter 1 and assume that actual costs were identical to estimated costs.
You are required:

(a) To produce in columnar form absorption and variable costing profit statements.

(b) To comment on the results for each quarter and the year as a whole.

Transcribed Image Text:

() Direct materials 2.60 Direct labour 3.00 Variable overhead 0.40 Fixed overhead 1.00 7.00