Page 6 - PowerPoint Presentation
P. 6
VARIABLE AND ABSORPTION COSTING
Absorption Costing Variances
Example:
Direct material R30 per unit
Direct Labour (assume variable) R60 per unit
Budgeted fixed overheads R200 000
Actual fixed overheads R231 000
Fixed selling and distribution costs R27 000
Normal capacity 20 000 units
Required:
Prepare the variable and absorption costing income
statements assuming that actual production for the year was
21 000 units and there were 2 000 units in closing stock.
6
