QUESTION 5 A company plans to produce and sell 50,000 units of its regular product during the coming month at GH12 per unit. A unit of the product requires 5kg of materials valued at GH0.50 per kg and 3 hours of direct labour paid at GH0.75 per hour. Selling and distribution cost is budgeted at GH50,000 variable and GH60,000 fixed. Fixed production overhead is budgeted at GH80,000 and GH40,000 for administration. Required: (a) Calculate the product cost per unit under the following costing basis; i. Absorption costing ii. Marginal costing (b) Prepare a budgeted profit statement for the coming month under the following costing basis; i. Absorption costing ii. Marginal costing. QUESTION 6 The following information has been extracted from the records of a company; Per unit GHE 10 Selling price Direct material cost 2 Direct labour cost 1 Variable production overhead 1 Variable selling cost 0.5 Per month: Fixed production overheads 2,500 Fixed selling costs 600 Fixed administrative expenses 900 There were no opening inventory at the start of January. The budget forecast that, production would equal sales at 1,000 units per month. Actual results for the first quarter of 2021 were as follows: January February March Production (in units) 1,000 1,100 900 Sales (in units) 1,000 800 1,200 Required: Prepare income statement under marginal and absorption costing principles. QUESTION 7 Mudada Ltd makes and sells a single product and has total production capacity of 60,000 units per month. The budget for January 2014 contained the following information: 54,000 Normal capacity (Units) Variable costs per unit: Production (GH) Selling and distribution (GH) Fixed overheads: Production (GH) Selling and administration (GH) 150 45 1,420,000 1,200,000 The actual operating data for January 2014 is as follows: Production Sales @ GH250 per unit Opening inventory of finished goods 24,000 units 22,000 units 4,000 units During the month of January 2014, the variable factory overheads exceeded the budget by GH240,000. Required: (a) Prepare profit statement for the month of January using: (i) Marginal costing: and (ii) Absorption costing. (b) Reconcile the difference in profits (if any), under the two methods. (c) Explain the reason (s) for the difference in the profit figures (if any) under the two methods