Access Ltd manufactures and sells a single product X, the standard unit cost details

of which are as follows:

N$

Direct Materials 65

Direct Wages 45

Variable Overhead 30

The Budgeted monthly fixed production overheads are $45,000. The budgeted

output per month is 3,000 units.

The product has a standard selling price of $175 per unit.

The actual production and sales for the two months were:

April May

Units Units

Sales 3,200 3,300

Production 3,000 3,100

There was an opening stock of 500 units on 1st April.

Required:

(a) Calculate the standard cost and profit for one unit of X. (5 marks)

(b) Prepare the income statements for each April and May, using:

(i) Marginal costing

(ii) Absorption costing (16 marks)

(c) Advise the management team of Access Ltd on the best costing method.

(4 marks)

(Total 25 mark