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Question #6 Modem Metal Works details in German Silver Sets; the standard production cost of which is as under: RS. 4kg @ Rs.35 3 Hrs @ Rs.30 Direct material Direct labour F.O.H. Variable Fixed Total cost 140 90 15 100 345 Normal output is 16,000 units per annum, costs relating to selling, distribution and administration are: MARGINAL AND ABSORPTION COSTING 5 Variable 20% of sales value Fixed Rs.900,000 per annum The only variance is fixed (production) OH volume variance. There are no sets in finished goods stock as on 14 April 2002. The fixed overheads expenditure is spread throughout the year. The selling price per set is Rs.700. The numbers of sets to be produced and sold are budgeted are: Six month ending six month ending 30th September 2002 31st March 2003 8,500 7,000 7,000 8,000 Production Sales Required: (0) Prepare statements showing sales, costs of sales and profit for each six month period, using: Marginal costing Absorption costing (ii) Prepare an explanatory statement reconciling each six months period profit using marginal costing with that of absorption costing