The following details have been extracted from EECL’s budgets.
Selling price per unit £140
Variable production costs per unit £45
Fixed costs per unit £32
The budgeted fixed production cost per unit was based on a normal capacity of 11,000 units per month.
Actual details for the months of January and February are given below-
January February
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Production volume units 10000 11500
Sales volume units 9800 11200
Selling price per unit 135 140
Variable production cost per unit 45 45
Total fixed production costs 350,000 340,000
There was no closing inventory at the end of the month.
Required:
1) required to produce an income statement to calculate the actual profit for January and February using absorption costing. assume that any under/over absorption of fixed overheads is debited /credited to the income statement each month.
2)The actual profit figure for the month of January using marginal costing was £532,000. Using appropriate calculations, state why there is a difference between the actual profit figures for January using marginal costing and absorption costing.
please calculate marginal and absorption costing income statements along with workings