Question 6 (6 Marks)

Entity Z is trying to obtain a cost estimate for the costs of repairs. The following monthly repair costs have been recorded for the past six months.

Plack Company is a manufacturing company that makes and sells a single product. The following information relates to the companys manufacturing operations in the next financial year.

Opening and closing stock: Nil

Production: 18,000 units

Sales: 15,000 units

Fixed production overheads: R117,000

Fixed sales overheads: R72,000

Using absorption costing, the company has calculated that the budgeted profit for the year will be R43,000.

Required:

What would be the budgeted profit if marginal costing is used, instead of absorption costing?