The following details have been extracted from KL?s budget:Selling price per unit ..................................$140Variable production costs per unit
Question:
The following details have been extracted from KL?s budget:Selling price per unit ..................................$140Variable production costs per unit ...............$45Fixed production costs per unit ...................$32The 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:(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.(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.
Step by Step Answer:
In absorption costing both variable and fixed costs are considered in the cost of the product On ...View the full answer
