Reference no: EM132203274

The following details have been extracted from KL's budget:   

             Selling price per unit                             $140

             Variable production costs per unit          $45  

             Fixed production costs per unit              $32

The budgeted fixed production cost per unit was based on a normal capacity of 11,000 units per month.

Actual details for the months of January and February are given below:

                                                                           January                       February 

Production volume (units)                                  10,000                          11,500

Sales volume (units)                                             9,800                          11,200

Selling price per unit                                             $135                              $140   

Variable production cost per unit                            $45                               $45 

Total fixed production costs                           $350,000                      $340,000       

There was no closing inventory at the end of December.

Required:

(i) Calculate the actual profit for January and February using absorption costing. You should assume that any under / over absorption of fixed overheads is debited / credited to the Income Statement each month.