Question 4

If a company has a variable costing profit of R100 000, and an absorption costing profit of R81 100.

FMOH per unit in opening were R11 per unit, and R9 per unit in closing inventory. Total fixed

manufacturing costs incurred for the year were R1 125 000. There were 10 000 units in closing

inventory.

How many units were sold during the year?

How many units would have to be produced in order for the absorption costing profit to be

R253,600, and what would the FMOH cost per unit be at this level of production?

please explain.