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At the end of April 2016, Tropical Productions Enterprise had 350 units of product MK120 in store. For the month of May 2016, the company

At the end of April 2016, Tropical Productions Enterprise had 350 units of product MK120 in store. For the month of May 2016, the company budgeted to produce 5,000 units of the product at a selling price of $2,000 each. Fixed production, administration and selling expenses were expected to be $1,500,000, $1,000,000 and $800,000 respectively. During the month, the company produced 4,500 units of the product. On May 31, 2016, there were 550 units of the product on hand. The following cost information relating to the product was made available at the end of May 2016:

Cost per unit

Details $
Direct material 300
Direct labour 350
Variable production overheads 300
Total 950

Required:

  1. What was the fixed production overhead cost per unit for Product MK120?
  2. Determine the full cost per unit in May 2016 for Product MK120.
  3. How many units of Product MK120 were sold in May 2016?
  4. Calculate the profit for May 2016 using the marginal costing approach.
  5. Compare the profit result above using absorption costing techniques.

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