Reference no: EM132621148

Real Ltd Manufacturing operations for 2020 are as follows:

Per unit: $000

Sales price 50

Direct material cost 18

Direct wages 4

Variable production overhead 3

Per month: $000

Fixed production overhead 99,000

Fixed selling expenses 14,000

Fixed administration expenses 26,000

• Variable selling expenses is 10% of sales value.
• Normal budgeted capacity is 11 000 units per month.

Actual Performance

January Units

Sales 10,000

Production 12,000

February units

Production

Sales 12,000

Production 10,000

The closing inventory of January becomes the opening inventory for February

Using the two methods:

Question 1: Compute the unit production cost

Question 2: Determine the value of the closing inventory

Question 3: Prepare the Marginal Income Statement and the Absorption Income Statement for January and February

Question 4: Reconcile the net profits for January and February