2019-01-25T10:19:50+00:00 Assignments

Variable costing and Absorption Costing

This paper concentrates on the primary theme of Variable costing and Absorption Costing in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.

Variable costing and Absorption Costing

Variable costing and Absorption Costing

Workings

Monthly Sales Workings (Drury, 227-229)

JulyAugustSeptemberOctober
Units sold6000100001500011000
Selling price per unit ($ 138)138138138138
Total sales revenue (Units * SP)$828,000$1,380,000$2,070,000$1,518,000

 

Variable Expenses

Cost of goods sold per unit
 Qtycost per Qtytotal cost 
Direct material4 KGS$10$40
Direct labour2 Hrs$17$34
Manufacturing overhead8 Hrs$7$56
Total cogs per unit  $130
Total units soldJulyAugustSeptemberOctober
6000100001500011000
Total cost of sales (cog per unit * SP$780,000$1,300,000$1,950,000$1,430,000

 

Marketing and Administrative Costs

sales$828,000$1,380,000$2,070,000$1,518,000
Percentage of variable Admin and sales2%2%2%2%
Total variable admin cost$16,560$27,600$41,400$30,360

 

Total Variable Cost

Total variable admin cost$16,560$27,600$41,400$30,360
Total cost of sales (cog per unit * sp$780,000$1,300,000$1,950,000$1,430,000
Total Variable cost$796,560$1,327,600$1,991,400$1,460,360

 

Contribution Margin

Total sales revenue (Units * SP)$828,000$1,380,000$2,070,000$1,518,000
Total Variable cost$796,560$1,327,600$1,991,400$1,460,360
Contribution Margin$31,440$52,400$78,600$57,640

Fixed Cost per Unit

Budgeted production13,000
Budgeted fixed manufacturing overhead32500
Fixed Cost per unit2.5

 

Total Fixed Cost

Units sold6000100001500011000
Fixed cost per unit2.52.52.52.5
Total fixed manufacturing cost15000250003750027500
Fixed Admin and marketing cost25000250002500025000
Total fixed cost40000500006250052500

 

Net profit/ loss

JulyAugustSeptemberOctober
Contribution Margin$31,440$52,400$78,600$57,640
Total fixed$40,000$50,000$62,500$52,500
Net profit-$8,560$2,400$16,100$5,140

 

Net profit under the variable costing method

Profit Statement Using Absorption Costing
For the Three Months to 30 September
 JulyAugustSeptemberOctober
 $$$ 
Sales$828,000$1,380,000$2,070,000$1,518,000
     
Less: Variable Expense    
Cost of goods sold at cost$780,000$1,300,000$1,950,000$1,430,000
Marketing and administrative$16,560$27,600$41,400$30,360
Total Variable Expense$796,560$1,327,600$1,991,400$1,460,360
Contribution Margin$31,440$52,400$78,600$57,640
Less: Fixed Expense    
Manufacturing15000250003750027500
Marketing and administrative25000250002500025000
Total Fixed Expense$40,000$50,000$62,500$52,500
Net Profit (Loss) before tax using absorption-$8,560$2,400$16,100$5,140

 

Net profit/loss under the absorption costing method

Profit Statement using Variable Costing
For the Three Months to 30 September
 JulyAugustSeptemberOctober
 $$$ 
Sales$828,000$1,380,000$2,070,000$1,518,000
     
Less: Variable Expense    
Cost of goods sold at cost$444,000$740,000$1,110,000$814,000
Marketing and administrative$16,560$27,600$41,400$30,360
Total Variable Expense$460,560$767,600$1,151,400$844,360
Contribution Margin$367,440$612,400$918,600$673,640
Less: Fixed Expense    
Manufacturing15000250003750027500
Marketing and administrative25000250002500025000
Total Fixed Expense$40,000$50,000$62,500$52,500
Net Profit (Loss) before tax$327,440$562,400$856,100$621,140

Work cited

Drury, Colin. Cost and management accounting : an introduction. London: Thomson Learning, 2006. Print.


0% Plagiarism Guaranteed & Custom Written, Tailored to your instructions


International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

UK Registered Company # 11483120


100% Pass Guarantee

Order Now

STILL NOT CONVINCED?

We've produced some samples of what you can expect from our Academic Writing Service - these are created by our writers to show you the kind of high-quality work you'll receive. Take a look for yourself!

View Our Samples

corona virus stop
FLAT 25% OFF ON EVERY ORDER.Use "FLAT25" as your promo code during checkout