“Mick’sproducts”has prepared the following production budget for the coming year

Question

“Mick’sproducts”has prepared the following production budget for the coming year

Normal and budgeted capacity                10,000 units

Directmaterial                      $120000

Directlabour                                     $70000

Variable factory overhead $ 30 000

Fixed factory overhead       $ 20 000

Require

Calculate the budgeted unit cost of production using absorption costing and direct costing

“Mick” sales for the year were 8,000 units and production was 10,000 units as budgeted

Calculate ending inventory

Explanation / Answer

Budgeted unit cost :

Calculate ending inventory

Absorption costing = 24*2000 = $48000

Direct costing = 22*2000 = $44000

Absorption costing Direct Costing Direct material 120000 120000 Direct labour 70000 70000 Variable factory overhead 30000 30000 Fixed factory overhead 20000 Total 240000 220000 Units 10000 10000 Unit cost 24 22

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.