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Question 3 (30 marks) Junction Mall. Selected cost and operating data relating to the product for 2018 is given The Nima Company Limited produces and
Question 3 (30 marks) Junction Mall. Selected cost and operating data relating to the product for 2018 is given The Nima Company Limited produces and sells executive office desks from a shop at the below: Selling Price GH 50 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labour Variable manufacturing overhead 10 6 4 Fixed manufacturing overhead per year Selling and administrative per unit sold Fixed selling and administrative per year 100.000 3 50,000 Units in beginning inventory Units produced during the year Units sold during the year 0 10,000 9.000 Required: a. Assume the company uses absorption costing method. i. Compute the unit product cost. Prepare an income statement for the year. 3 marks 6 marks b. Assume the company uses variable costing method. i. ii. Compute the unit product cost. Prepare an income statement for the year. 3 marks 6 marks c. Reconcile the variable costing and absorption costing methods operating incomes and explain why they are different. S marks d. Explain how fixed manufacturing overhead costs are shifted from one year to another year under the absorptions costing method. 4 marks
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