2.

Purple World manufactures and sells a single product. The following information is available for the period ended March 2021.

Budgeted costs at normal activity of 25,000 units

N$

Prime cost

375,000

Variable production overheads

25,000

Fixed production overheads

150,000

Variable selling and administration overhead

50,000

Fixed selling and administration overhead

100,000

During the period, Purple World produced 30,000 units and sold 24 000 units at N$35 per unit. At the beginning of the period 4 000 units were inventory, which were valued at the budgeted costs shown above. Actual costs incurred were as budgeted.

1.

Required:

How much is the value of closing inventory under the absorption costing system?

2.Calculate the absorption method cost of inventory per unit for the period.

3.Calculate total period cost under marginal costing

4.How low or high is the absorption costing profit over the marginal costing profits?

5.Calculate the total period cost under absorption costing

6.Using the direct method, calculate the cost of sales.

7.