Marginal and Absorption Costing; cost volume profit analysis (CVP)

Question #1

You have landed a job as the management accountant in a manufacturing company. The company manufactures a single product for which the following data based on a budgeted capacity of 60,000 litres per period, are as follows:

Stock, output and sales data

Details	Period 1	Period 2
Production	55,000 litres	70,000 litres
Sales	60,000 litres	55,000 litres
Opening stock	1,000 litres	800 litres
Closing stock	1,500 litres	15,000 litres

Cost per unit

Details	$
Direct material	2.50
Direct labour	3.00
Production overheads	8.00
Total	13.50
Selling price per litre	$20.00

Administrative and selling overheads are fixed at $100,000 per period and half of the production overheads are fixed.

Required:

(a) Prepare a summary showing:

(i) Marginal costing techniques.

(ii) Absorption costing techniques

Marginal and Absorption Costing; cost volume profit analysis (CVP)

Question #1

You have landed a job as the management accountant in a manufacturing company. The company manufactures a single product for which the following data based on a budgeted capacity of 60,000 litres per period, are as follows:

Stock, output and sales data

Details	Period 1	Period 2
Production	55,000 litres	70,000 litres
Sales	60,000 litres	55,000 litres
Opening stock	1,000 litres	800 litres
Closing stock	1,500 litres	15,000 litres

Cost per unit

Details	$
Direct material	2.50
Direct labour	3.00
Production overheads	8.00
Total	13.50
Selling price per litre	$20.00

Administrative and selling overheads are fixed at $100,000 per period and half of the production overheads are fixed.

Required:

(a) Prepare a summary showing:

(i) Marginal costing techniques.

(ii) Absorption costing techniques