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One of the products that are manufactured by Fung Sisters Ltd is ZPQ. The company has a budgeted capacity of 6,000 units per month and

One of the products that are manufactured by Fung Sisters Ltd is ZPQ. The company has a budgeted capacity of 6,000 units per month and monthly fixed production expenses relating to this product are estimated at $360,000. At the start of January 2015 the company had in store 400 units of the product. During January 2015 the company produced 5,400 units of the product and sold 5,500 units. Administrative and selling expenses for the month of January 2015 were estimated at $500,000 and $250,000 respectively. The following information was also taken from the company's records for the month of January 2015:

Cost per unit

Details $
Direct materials 200
Direct labour 250
Variable overheads 100
550
Selling price per unit $1,200

Required:

  1. Closing stock in units for January 2015.
  2. The marginal cost per unit.
  3. The full cost per unit.
  4. Contribution margin per unit. Selling price - variable cost per unit
  5. Profit results using marginal costing for January 2015.
  6. Profit results using absorption costing for January 2015.
  7. Reconcile the difference in profit obtained under both costing methods.

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