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Pamlico Manufacturing Ltd has the following information given in the table below. Sales per unit Variable production cost per unit Variable administration sales and distribution
Pamlico Manufacturing Ltd has the following information given in the table below. Sales per unit Variable production cost per unit Variable administration sales and distribution per unit Fixed production costs Fixed administration sales and distribution Opening inventory in units Units produced N$ 12.50 7.50 1.00 37 500 18 750 2 500 25 000 At the beginning of December 2018, there were 2.500 units in inventory. Required: Draw up a statement of comprehensive income according to marginal costing principles for three different levels of sales, for the month of December. a) 12 500 units b) 18 750 units c) 25 000 units Using the above information on Pamlico Manufacturing Ltd, prepare the statement of comprehensive income using absorption costing principles for the month of December and assume the following: (Marks 25) 1. Normal level of activity is 25 000 shirts per month. 2. Fixed production costs were 37 500 for the month. Question 3 Using examples, differentiate between marginal and absorption costing systems used in cost accounting. (Marks 10)
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