Reference no: EM132548836
Kamelwa Limited manufactures and sells a single product coded Kams. The following data relate to the four quarters in the last financial year.
K
Selling price per unit 110
Variable cost per unit 60
Fixed cost per quarter 12000
Normal activity is 500 units and production and sales for the four quarters are as follows:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
units units units units
Sales 500 400 550 450
Production 500 500 450 500
There were no opening inventory at the start of quarter 1.
Required
Question (i) profit statements for each of the quarters 1 to 4, based on absorption costing principles.
Question (ii) profit statements for each of the quarters 1 to 4, based on marginal costing principles.
Question (iii) Comment briefly on the results obtained in each period and in total by the two systems.
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