Duration of the assessment: 24 hours from the start of your scheduled tutorial time 

Group leader to submit your answer booklet via Course Canvas site

Attempt ALL parts of the question

Requirements: Form a group [no less than three (3) and no more than four (4) students] to answer these questions.

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Question 1

3DTV Ltd produces and sells 3D television sets. Actual data relating to January, February and March 2019 are as follows:

Particulars

January

February

March

Opening stock (units)

0

150

150

Production (units)

1,500

1,400

1,530

Sales (units)

1,350

1,400

1,530

Variable Production cost per unit produced

$1,000

$1,000

$1,000

Operating (marketing) cost per unit sold

$800

$800

$800

Fixed production costs

$525,000

$525,000

$525,000

Fixed operating (marketing) costs

$130,000

$130,000

$130,000

The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed production cost per unit is 1,500 units. Any over-/under-absorption is written off to Cost of goods sold in the month in which it occurs.

REQUIRED:

(a)Prepare income statements for Entertainers Ltd for January, February and March 2019 under variable costing (also known as marginal costing).

(b)Prepare income statements for Entertainers Ltd for January, February and March 2019 under both absorption costing (also known as full costing).

(c)Explain the difference in operating profit for January, February and March 2019 under variable costing and absorption costing.