cost accounting 1

Q3. Pulp and Paper Industry has three process of Foaming; Pressing and Drying. The following information is provided relating to the three process expenses in OMR. Foaming Pressing Drying Direct Material 72,000 58,000 20,000 Direct Labour 110,000 112,400 14,000 Factory Variable Expenses 125% of Pressing 16,000 12,000 Selling Variable Expenses 4,000 2,800 1,000 Fixed Factory Expenses 4,000 4,000 2,000 Fixed Selling Expenses 6,000 8,000 2,000 Sales 400,000 270,000 300,000 Fixed Factory and selling overhead are apportioned to all the process on equitable basis. From the information provided you are required to a. Prepare Income statement under Marginal Costing and Absorption Costing method. (4.5 Marks) b. From the above three process, Identify which process is getting lesser profit under Marginal costing method and also make an estimation for next year profit if the company want to earn 25% extra profit to the existing profit. (0.5 Mark) Answer: Page 5 of 13