answer the entire of question 10

Hyper Limited manufactures a highly sorted mens' accessory called 'T-pin', which is sold in all leading supermarkets and boutiques. The company has been in operation for five years and, now that the production process has been established and refined, the directors have decided to focus on increasing profit with emphasis on cost control. The managing director has recently read an article about product costing and, in particular, absorption and variable costing and is keen to understand how this would affect company profits. The following information is available for the month of September: Sales (units) Direct materials Direct labour Variable production overheads Total selling and administrative expenses September 48,000 N$ 101 250 N$ 67 500 N$ 27 000 N$ 172 800 Additional information: (0) Hyper Limited's normal production capacity is 45 000 units per month. (ii) Fixed production overheads are N$ 88 200 per month. (iii) The company sells 'T-pin' for N$ 25 each. (iv) Total selling and administrative expenses includes a fixed and variable element. The variable portion is N$ 1.55 per unit and is based on units sold. (v) At 31 August the company had 9 000 units of 'T-pin' in its warehouse. (vi) The cost of direct materials and labour had increased by 25 cents and 30 cents per unit respectively on 1 September 2017. REQUIRED: Marks 10.1 Calculate the cost per unit using marginal and absorption costing methods 2 7.5 3.5 10.2 Prepare the income statement for Hyper Limited for the month of September using Variable costing 10.3 Calculate the profit as per absorption costing using 1.2 above 10.4 Provide a brief explanation of the effect on profit if sales are greater than production TOTAL MARKS FOR QUESTION 10 2 15 Page 11 of 71 PREVIOUS NEXT