Page 186 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 8

Test your understanding 3

ABC makes only one product, the unit costs of which are:

$

Direct materials 3

Direct labour 6

Variable production overhead 2

Fixed production overhead 4

Variable selling cost 5

The selling price of one unit is $21

Budgeted fixed overheads are based on budgeted production of 5,000 units.
Opening inventory was 1,000 units and closing inventory was 4,000 units.

Sales during the period were 3,000 units and actual fixed production
overheads incurred were $25,000.

(a) Calculate the total contribution earned during the period

(b) Calculate the total profit or loss for the period under marginal costing

(c) Calculate the total profit or loss for the period under absorption costing

(d) Reconcile the profits calculated in parts (c) and (d)

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