Answer to Question #158047 in Economics for aqsa nabi

Question

Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:

Fixed cost:

Fixed Manufacturing overhead

Rs    40,000

Fixed Selling & Administrative

 Rs    60,000

Selling Price per unit

Rs 100

Variable cost per unit:

Direct Materials

Rs 30

Direct labor

        Rs 10

Variable Manufacturing overhead

Rs 5

Variable Selling & Administrative

Rs 2

Units In beginning Inventory

0

Units Produced

2000

Units Sold

1900

Required:

a. Compute the unit product cost under both absorption and variable costing.(2 Marks)

b. Prepare an income statement for the year using absorption costing.( 3 Marks)

c. Prepare a contribution format income statement for the year using variable costing.(3 Marks)

d. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year. (2 Marks)

Answer 1

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