Craddle ltd manufactures a single product with a selling price of N$28 per unit.

3.2 reconcile the profit of the absorption costing and marginal costing method for september 2014 only

3.3 give a detailed explanation why the difference in profits for september 2014 between the two costing methods

N$5.20 Direct material N$6.10 Direct Labour Variable overhead N$1.60 Fixed production overheads are N$30 000 per month. Selling and Administration overheads are semi-variable in nature: variable costs are 5% of sales and fixed costs are N$13 000 per month. Production and sales quantities over a two month period are: Production Sales August 2014 4000 3 500 September 2014 3 600 3 800 There is no finished goods inventory at the beginning of August 2014. The company has prepared the following statement of comprehensive income for each of the two months using the absorption costing method: August 2014 NS NS 98 000 (71 400) Sales Cost of sales Opening inventory Cost of production Closing inventory* September 2014 NS NS 106 400 (80 270) 10 200 76 440 (6 370) 81 600 (10 200) Gross profit Selling and administration overhead 26 600 17 900 26 130 18 320 Profit for the period 8 700 7810 *Closing inventory valuation: August 2014 - N$81 600/4000 x 500 September 2014 - N$76 440/3600 x 300 Activ Go to MARKS REQUIRED: 3.1 Prepare a statement of comprehensive income for each of the two months using the marginal costing method. 10 j w 28C