Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Determine Profit in Long-Term
To demonstrate the point about profit in the long-term, let us assume that a company sells and makes a single product. There are no opening stocks of the product at the beginning of period 1, for that the variable production cost is Ksh.4 and the sales price Ksh.6 per unit. However fixed costs are Ksh.2, 000 per period, of that Ksh.1, 500 are fixed production costs,
Period
Period 2
Sales
1,200 units
1,800 units
Production
1,500 units
What would the profit be in all period utilizing the following methods of costing?
a) Absorption costing. Suppose usual output is 1,500 units per period.
b) Marginal costing.
Solution
It is significant to notice that even if sales and production volumes in each period are different and then the profit for each period via absorption costing will be different from the profit via marginal costing, over the full period, net production equals sales volume, the net cost of sales is the similar, and hence the net profit is the same via either method of accounting.
a) Absorption costing: the absorption rate for fixed production overhead is,
= £ 1,500/£1,500 units
= £ 1 per unit
Period 1
Period 3
Ksh.
7,200
10,800
Production costs
Variable
6,000
12,000
Fixed
1,500
3,000
7,500
15,000
Add opening stock b/f
-
9,000
Less closing stock c/f
Production cost of sales
6,00
(Under-)/over-absorbed overhead
Total production costs
Gross profit
1,200
1,800
Other costs
500
1,000
Net profit
700
1,300
2,000
b) Marginal Costing
Variable production cost
Variable production cost of sales
4,800
Contribution
2,400
3,600
Fixed costs
4,000
Profit
400
1,600
in what ways does specific order costing differ from process costing
On July 1, 2008, Falk Company signed a contract to lease space in a building for 15 years. The lease contract calls for annual (prepaid) rental payments of $100,000 on each July 1
Reasons for Overhead Variances Useful for Control Reasons Overhead variances are essentially a book balancing exercising giving an arithmetic reconciliation between the actual
Year Ending April 2009, 2009 April 30, 2008 Net Sales $10,148,082 $10,070,778 Accs Receivable 1,171,797 1,161,481 Assume that the accounts receivable (in thousands) were $996,852 a
Group Bonus Plan There are specific operations or jobs that require to be done collectively via a group of workers, as an example of, continuous production work flows in asse
Farmer Dorr figures that her fixed costs are $2,000, and the relevant portion of her total cost curve is: Thousands of
If fixed costs are $200,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?
what is a cost sheet? what are its advantages?
Balance Sheet Classi?cations and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . .
Identify the individual cost components and the total cost of delivering the product from supplier to retailer. Identify each cost in terms of the incremental addition to the pro
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd