1. During the current period, ABC Ltd sold 60,000 units of
product at Rs. 30 per unit. At the
beginning for the period, there were 10,000 units in
inventory and ABC Ltd manufactured
50,000 units during the period. The manufacturing costs and
selling and administrative
expenses were as follows:
Total cost Number of units Unit cost
Rs. Rs.
Beginning inventory:
Direct materials 67,000 10,000 6.70
Direct labour 1,55,000 10,000 15.50
Variable factory overhead 18,000 10,000 1.80
Fixed factory overhead 20,000 10,000 2.00
Total 2,60,000 26.00
Current period costs:
Direct materials 3,50,000 50,000 7.00
Direct labour 8,10,000 50,000 16.20
Variable factory overhead 90,000 50,000 1.80
Fixed factory overhead 1,00,000 50,000 2.00
Total 13,50,000 27.00
Selling and administrative expenses:
Variable 65,000
Fixed 45,000
Total 1,10,000
Instructions:
1. Prepare an income statement based on the variable
costing concept.
2. Prepare an income statement based on the absorption
costing concept.
3. Give the reason for the difference in the amount of
income from operations in 1 and
2.
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Answer / pushpa s
2. Statement of absorption costing concept:
Total Sales : 60000X30= 18,00,000
Total EXP : 2,60,000+13,50,000=16,10,000
Total Advt Exp : 65000+45000 = 1,10,000
=18,00,000-16,10,000-1,10,000
Total Income : 80,000
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variable costing income statment :
sale (60000x30) 18,00,000
less variable cost of good sold :
begning inventory (1000x24) 2,40,000
variable good manufacting(5000x25)12,50,000
variable good sold : 14,90,000
manufacturing gain 3,10,0000
less: variable selling and adm, exp 65000
contribution margin 2,45,000
less fixed cost
fixed manufacturing cost 100000
fixed selling and adm ,exp 45000
total f cost 145000
income on variable concept 100000
part(2)statment of absorption costing concept:
sale(6000x30) 18,00,000
cost of good sold :
begning inventry(1000x26) 2,60,000
cost of good uses(5000x27)13,50,000
less cost of good sold 16,10,000
gross profit 1,90,000
selling and adm exp 1,10,000
total income 80,000
give me answer of third questions
ok byee dear
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