Example 3 Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. The normal annual level of production on which the fixed production overhead absorption is based is...

Extracted text: Example 3 Ataala Ltd is a company that produces fruit juice which is bottled and sold in crates. The normal annual level of production on which the fixed production overhead absorption is based is 120,000 crates. Data for the just ended financial year of 31 December 2018 is as follows: Productien Sales Selling price Costs: 145,000 crates 112,000 crates GHS2,000 per crate Direct material Direct labour Variable overhead Fixed production overhead Variable selling and distribution cost Fixed selling and distribution cost Assume no opening inventories Required: Prepare profit statements for the year ended 31 December, 2018 based on (a) Marginal costing (b) Absorption costing (c) Reconcile the Profit figures in (a) and (b) above (d) Outline TWO differences between Marginal Costing and Absorption Costing 600 520 250 1,820,000 10% of sales revenue GHS234,000