Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year: Planned Production in units 30,000 Actual Production in units 29,000 Actual sales in units 28,000 Fixed Costs (Rs.) Per unit Variable Costs (Rs.) Raw Materials 52 Direct Labor 40 Variable FOH 28 Fixed FOH – Cost Rs. 159 ,500 Marketing and Administrative Costing Rs. 500,000 Note: Selling price of each single unit is Rs. 200. Required a. Prepare operating income statement under both, Absorption and Variable Costing Approach. (5 -Marks) b. Explain the reason of any difference in operating net profit under both approaches. (2 – Marks)

Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year: Planned Production in units 30,000...

Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year:

Planned Production in units	30,000
Actual Production in units	29,000
Actual sales in units	28,000

	Fixed Costs (Rs.)	Per unit Variable Costs (Rs.)
Raw Materials		52
Direct Labor		40
Variable FOH		28
Fixed FOH – Cost	Rs. 159 ,500
Marketing and Administrative Costing	Rs. 500,000

Note: Selling price of each single unit is Rs. 200.

Required

a.

Prepare operating income statement under

both, Absorption and Variable Costing Approach.

(5

-Marks)

b.

Explain the reason of any difference in operating net profit under both approaches. (2 – Marks)

Aug 15, 2022

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Iqbal Manufacturing Co. uses direct costing. Following information have been obtained from their accounting records for a single product at the end of the year: Planned Production in units 30,000...

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