Q: Solve these questions:

Q1: Selling price $20 per unit, Units Produced 30,000; sold 20,000; beginning inventory zero. Variable unit cost manufacturing $9 (direct materials $5, direct labor $3, and variable overhead $1). Selling and administrative expense $2. Fixed cost manufacturing overhead $120,000, selling and administrative expense $15,000.

Required:

Compute per unit produced cost under full and variable costing

Prepare income statement under full and variable costing

Q2: Karim and Company applied manufacturing expenses to production by means of a predetermined rate based upon normal capacity production.

Manufacturing expenses at the normal capacity of 400,000 direct labor hours are estimated to be Rs. 340,000 of which Rs. 120,000 are fixed and Rs. 220,000 are variable expenses. Actual direct labor hours for the year were 368,000 and the total actual manufacturing expenses amounted to Rs. 305,000.

Required:

1. Under or over applied FOH
2. Spending Variance
3. Idle Capacity Variance