Question
The data in the table below pertain to Tyre World Company Limited, a manufacturer of tyres. Tyre World Company Limited had no beginning inventories in
The data in the table below pertain to Tyre World Company Limited, a manufacturer of tyres. Tyre World Company Limited had no beginning inventories in December 2020
| Details | Amounts |
| Selling price per tyre | $100 |
| Variable production overheads per tyre | $16 |
| Direct material cost per tyre | $20 |
| Direct labour cost per tyre | $10 |
| $46 | |
| Fixed manufacturing overheads | $7 000 000 |
| Fixed operating expenses | $1 100 000 |
| Number of tyres produced | 1 000 000 |
| Number of tyres sold | 770 000 |
Required:
a) Determine the closing inventory units as at December 31, 2020
b) Determine the Marginal and Absorption cost per unit of tyre.
c) Prepare the marginal costing statement for December 2020.
d) Prepare the absorption costing statement for December 2020.
e) Reconcile the two profits reported in your answer above.
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College Accounting A Practical Approach
Authors: Jeffrey Slater, Mike Deschamps
14th Edition
0134729315, 978-0134729312
