QUESTION 2 The following data concerns the output of Encore Limited over a two-year period. Opening stock Sales Production 2017 units 2018 units 20 000 35 000 225 000 210 000 240 000 190 000 The Production of 200 000 units per annum is considered to be the normal activity level of the company. Fixed production overheads are budgeted at $400 000 per year. The company has estimated its total cost per unit for 2017 and 2018 as follows: Direct materials Direct wages Variable overheads Fixed overheads $2.00 $3.00 $1.00 $2.00 $8.00 Each unit of output is sold on the market for $25. Fixed selling and administration overheads amounted to $220 000 for the period and fixed overhead incurred was as planned. REQUIRED: (a) Prepare Marginal and Absorption costing statements for both years to determine the profit or loss for each period. (b) Prepare a statement to reconcile the profit or loss determined using both systems (c) Explain briefly the difference in the treatment of fixed production overheads under Marginal Costing and Absorption Costing. QUESTION 3 The managers of Sawgrass Distributors limited currently employ a policy of marginal costing system, but want to explore the benefits of absorption costing. Below are data relevant to the year ended December 31, 2012 and 2013: 2012 2013 Selling price per unit Labour cost per unit $150 $150 $20 $20 Direct material per unit $25 $25 Direct expense per unit $5 $5 Variable overheads per unit $10 $10 Fixed overheads (actual) $1,500,000 $2,500,000 Variable selling expenses per unit $10 $10 Actual production 150,000 150,000 Actual sales 130,000 150,000 On January 1, 2012, the company had 20,000 units valued at a cost of $1,240,000. For both periods the entity budgeted fixed overhead to be $1,000,000 and budgeted production of 500,000 units. Overheads are absorbed on a per unit basis currently. Required: a. Prepare an income statement using variable/marginal as well as absorption costing for the year ended December 31,2012. b. Prepare an income statement using variable/marginal as well as absorption costing for the year ended December 31, 2013. c. Prepare a reconciliation between both profits for both years. FILE HOME INSERT DESIGN PAGE LAYOUT REFERENCES REVIEW VIEW Tutorial sheet - Marginal and Absorption costing - Word (Product Activation Failed) MAILINGS Cover Page Blank Page Page Break Pages Table Pictures Online Shapes SmartArt Chart Screenshot Apps for Online Pictures Office Hyperlink Bookmark Video Cross-reference A A Signature Line Date & Time Tables Illustrations Apps Media Links Comments Comment Header Footer Page Text Number Box Header & Footer Quick WordArt Drop Parts Cap Object Text QUESTION #4 PAGE 3 OF 4 659 WORDS Type here to search The management of Pepsi's Lunch Shop is contemplating the use of Marginal or Absorption costing system. They would like to see what is involved in the preparation of each. The data below is for the year ended April 30, 2016 to prepare and sell an average meal: Selling price per unit Labour cost per unit $550 $65 Direct material per unit $70 Direct expense per unit $45 Variable overheads per unit $40 Fixed overheads (actual) Variable selling per unit $30,000,000 $50 1,500,000 1,350,000 Actual production Actual sales During the period the entity budgeted fixed overhead to be $36,000,000 and budgeted production of 1,500,000 meals. Overheads are absorbed on a per unit basis currently. Required: a. Prepare an income statement based on the Marginal Costing system. b. Prepare an income statement based on the Marginal Costing system. c. Reconciling profits between marginal costing and absorption costing. 27C ? Microsoft account Equation Symbol Symbols 4) 7:19 PM 10/20/2021 + 90%