Solution-Prepare profit statements for the year ended

Prepare profit statements for the year ended december

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Reference no: EM132644758

Alpha Limited is a company that produces surgical spirit which is bottled and sold in cases. The normal annual level of production on which the fixed production overhead absorption is based is 120,000 cases.

Data for the most recent financial year ended 31 December 2019 are as follows:

Production    145,000 cases
Sales    112,000 cases
Selling price sh.                  2,000 per case
Cost: Direct material            600
Direct labour    520
Variable overhead    250
Fixed Production Overhead    1,820,000
Variable Selling & Distribution Cost 10% of sales revenue
Fixed Selling and Distribution Cost sh. 234,000

Assume no opening stocks.

Question 1: You are required to prepare profit statements for the year ended 31 December 2019 based on

(a) Marginal Costing
(b) Absorption Costing
(c) A statement to reconcile the profits from marginal and absorption costing

Reference no: EM132644758

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Prepare profit statements for the year ended december

Reference no: EM132644758

Reference no: EM132644758

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