Question 1

Green Limited is a manufacturing company commencing business on 1 January 2019. The companys sales and production records for the year ended 31 December 2019 are summarized as follows:

Required:

Prepare operating statements of Green Limited for the year ended 31 December 2019 using:

(a) Absorption costing approach; and

(b) Marginal costing approach.

(15marks)

Number of units sold 15,000 units Number of units produced Sales $360,000 Direct material cost $90,000 Direct labour cost $50,000 Variable production overhead $60,000 Fixed production overhead $80,000 Variable selling and administrative overhead $30,000 Fixed selling and administrative overhead $40,000