Q2.

Amex Company, which has woolen scarves to produce, has provided the following data concerning its most recent month of operations:

Selling price TK. 100

Units in beginning inventory 200

Units produced 3,800

Units sold 3,600

Units in ending inventory 400

Variable costs per unit:

Direct materials TK.28

Direct labor TK.11

Variable manufacturing overhead TK.5

Variable selling and administrative TK.6

Fixed costs:

Fixed manufacturing overhead TK.60, 000

Fixed selling and administrative TK.25, 000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

a) What is the unit product cost for the month under variable costing?

b) What is the unit product cost for the month under absorption costing?

c) Prepare an income statement for the month using the contribution format and the variable costing method.

d) Prepare an income statement for the month using the absorption costing method.