Question
Dexter Corporation produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating
Dexter Corporation produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for two years are given below:
Selling price per unit | P500 |
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Direct materials | P110 |
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Direct labor | P60 |
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Variable manufacturing overheads | P30 |
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Fixed manufacturing overheads per year | P1 200 000 |
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Variable selling and administrative costs | P40 |
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Fixed selling and administrative costs | P700 000 |
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Units in beginning inventory | 2 000 |
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Units produced during the year | 6 000 |
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Units sold during the year | 8 000 |
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Units in ending inventory | 0 |
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Required: |
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a. | Prepare an income statement under absorption costing. | (8 marks) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
b. Prepare an income statement under marginal costing. | (8 marks) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
c. | Reconcile the marginal costing and absorption costing net operating incomes. | (4 marks) Dexter Corporation produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for two years are given below:
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