Dan Wood Ltd commenced business on 1 January 2020 making one product only,which sells for K160 per item. The production and sales data for each of the first threemonths of 2020 was as follows:JanuaryFebruaryMarchSales in units2,400|2,5003,800Production in units 2,700|2,4004,000Actual information for each month was as follows:Direct materials3 kilograms at K5 per kilogram4 hours at K10 per hourVariable production overheads 150% of direct labour10% of sales valueDirect labourSales commissionFixed production overheadsFixed selling overheadsK10,000K35,000There was no opening inventory at the start of January. Fixed productionoverheads are budgeted at K120,000 per annum and are absorbed into productsbased on a budgeted normal output of 30,000 units per annumRequired:(a) Prepare a profit statement for each of the three months using absorptioncosting principles(b) Prepare a profit statement for each of the three months using marginalcosting principles.(c) Present a reconciliation of the profit or loss figures given in your answer to (a)and (b) together with an explanation of the reason for the difference.

What is the main difference between absorption costing and variable costing? Under absorption…

Dan Wood Ltd commenced business on 1* January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 | 2,500 3,800 Production in units 2,700 2,400 | 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram 4 hours at K10 per hour Variable production overheads 150% of direct labour 10% of sales value Direct labour Sales commission Fixed production overheads Fixed selling overheads K10,000 К35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: (a) Prepare a profit statement for each of the three months using absorption costing principles (b) Prepare a profit statement for each of the three months using marginal

Dan Wood Ltd commenced business on 1* January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 | 2,500 3,800 Production in units 2,700 2,400 | 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram 4 hours at K10 per hour Variable production overheads 150% of direct labour 10% of sales value Direct labour Sales commission Fixed production overheads Fixed selling overheads K10,000 К35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: (a) Prepare a profit statement for each of the three months using absorption costing principles (b) Prepare a profit statement for each of the three months using marginal

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dan Wood Ltd commenced business on 1st January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 2,500 3,800 Production in units 2,700 2,400 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram Direct labour 4 hours at K10 per hour Variable production overheads 150% of direct labour Sales commission 10% of sales value Fixed production overheads K10,000 Fixed selling overheads K35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: (a) Prepare a profit statement for each of the three months using absorption costing principles (b) Prepare a profit statement for each of the three months using marginal…
Dan Wood Ltd commenced business on 1st January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 2,500 3,800 Production in units 2,700 2,400 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram Direct labour 4 hours at K10 per hour Variable production overheads 150% of direct labour Sales commission 10% of sales value Fixed production overheads K10,000 Fixed selling overheads K35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: Prepare a profit statement for each of the three months using marginal costing principles.
The Dermaniaga Company has the following information available: Table 3: Total Monthly Sales Month Sales (RM)June 68,000July 72,000August 74,000September 76,000October 78,000 Additional information: Sales price per unit is RM200 and the finished goods inventory level is 25% of the next month's unit sales. 5 kilograms of materials are required for each unit produced and the cost is RM50/kg. Inventory levels for materials equal 40% of the needs for the next month. Desired ending inventory for September is 157 kilograms of materials. Beginning inventory for July was 138 kilograms of materials. Each unit requires 0.8 hours of direct labor and the average wage rate is RM12 per hour. Required: 1. Analyze a production budget for July, August, September and the quarter in total. 2. Analyze a direct materials purchases budget in kilograms and Ringgit Malaysia for July, August, September and in total for the quarter. 3. Construct a…
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The data during the month of an enterprise who sells product M are as follows: Sale of 2,000 units at the before-VAT price of VND 300,000/unit in the domestic market. Export 500 units at FOB price of VND 310,000/ unit. Purchase 1,000 units with before-VAT price of VND 250,000/ unit. Purchase 300 units with price of VND 280,000/unit stated on the sale invoice. Deductible Input VAT for other purchased services: VND 1,000,000. VAT rate 10%. Exported goods are supported with sufficient documents as prescribed by law The VAT amount payable is * VND 41,100,000 VND 25,600,000 VND 49,500,000 VND 34,000,000
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit... $50.00 Production Costs: Direct Materials ... $10.00 ........ Direct Labour . $8.00 ........ Variable Manufacturing Overhead. $7.00 Fixed Manufacturing Overhead.... Fixed Selling & Administrative Expenses... Variable selling expense per unit ... $450,000 $300,000 ...... ..... $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate: i) the variable production cost per unit ii) the total production cost per unit iii) The total variable cost per unit iv) Total Fixed Costs c) Calculate Greek's break-even point in units and in sales dollars. d) Assuming sales equal to the…
ABC Company has monthly requirement of 900 units of Material B. The ordering cost per delivery is P450 and the carrying cost per unit is P27. In an economic order quantity, how many is the total deliveries during the year? a.18 b.13 c.5 d.9
Oak Manufacturers, which produces book cases, commenced trading on 02 January 2020. During thefirst month of operations the sales and production volumes were 5 000 units and 5 600 units respectively.Fixed manufacturing costs and administration costs totalled R56 000 and R34 000 respectively. Variablemanufacturing costs and selling costs amounted to R60 per unit and R32 per unit respectively.During February 2020 the sales and production dropped to 4 600 units and 5 000 units respectively. Theselling price per book case was R280. Variable manufacturing costs increased to R72 per unit whilst thevariable selling costs remained at R32 per unit. Fixed manufacturing costs increased to R82 000 but thefixed administration costs remained at R34 000. The increase in the fixed manufacturing costs is due tothe depreciation on new machinery purchased for R130 000. The first-in-first-out method for valuinginventories is used.Oak Manufacturers was using the absorption costing method to prepare its…
(b) Ace Ltd. manufactures a product and the following particulars are collected for the year ended March, 2018: Monthly demand (units) 250 Cost of placing an order (') 100 Annual carrying cost (` per unit) 15 Normal usage (units per week) 50 Minimum usage (units per week) 25 Maximum usage (units per week) 75 Re-order period (weeks) 4–6 You are required to calculate: (i) Re-order quantity (ii) Re-order level (iii) Minimum level (iv) Maximum level (v) Average stock level.