Q # 01

UNIT COST BY DIRECT COSTING

Direct Material 18
Direct Labour 24
Variable FOH 15

UNIT COST BY DIRECT COSTING 57

Q # 02

Manfactured Units 12500

Sold Units 10000
Ending Units 2500

i) Ending Inventory - Direct Costing 2500 8 20000

ii) Total Annual Fixed Manufacturing Cost 25000 12500

Variable Manufacturing Cost
Total Manufacturing Cost

Ending Inventory - Absorption Costing 2500 10 25000

iii) Varibale Manufacturing Cost 10000 8 80000

Variable Administrative Cost 12500 3 37500

Total Variable Cost charged to Expense 117500

iv) Fixed Manufacturing Cost 10000 2 20000

Fixed Administrative Cost 15000

Total Fixed Cost charged to Expense 35000

Q # 03

Absorption
Sales (20000x22) 440000
Less Cost of Goods Sold

Finished Goods Opening 0

Add Cost of goods Manufactured
Material 60000
Labour 60000
FOH - Variable 120000
FOH - Fixed 96000
Cost of Goods Manufactured 336000
Cost of goods availabe for sales 336000
Less Finished goods Ending 56000
Cost of goods sold 280000
Gross Profit 160000
Less Marketing & Admin Expenses 70000
Net Profit 90000

DIRECT COSTING
Sales (20000x22) 440000
Less Variable Cost of Goods Sold

Finished Goods Opening 0

Add Variable Cost of goods Manufactured
Material 60000
Labour 60000
FOH - Variable 120000

Variable Cost of Goods Manufactured 240000

Variable Cost of goods availabe for sales 240000
Less Finished goods Ending 40000
Variable Cost of goods sold 200000
Contribution Margin 240000
Less Fixed Expenses
Fixed FOH 96000
Fixed Marketing & Admin Expenses 70000 166000
NET PROFIT 74000

Q # 04
i)
Sales (28000x10) 280000
Less Variable Cost of Goods Sold

Finished Goods Opening (1000x4) 4000

Add Variable Cost of goods manufactured (30000x4) 120000
Variable Cost of Goods available for Sales 124000
Less Finished Goods Ending (3000x4) -12000
Variable Unadjusted Cost of Goods Sold 112000
Add Unfavourable Variance 5000
Variable Adjusted Cost of Goods Sold -117000
Gross Contribution Margin 163000
Less Variable Marketing Expense (28000x1) -28000
Contribution Margin 135000
Less Fixed Expenses

Fixed FOH 54000

Fiexd MARKETING & Admin Expense 20000 -74000
Operating Income from Direct Costing 61000

ii) Operating Income from Absorption

Fixed FOH Rate = 54000 1.5

36000

Operating Income Direct Costing 61000

Cost Deffered in inventory increase (2000x1.5) 3000
Operating Income from Absorption 64000

Q # 05
i) a) First Quarter Second Quarter

Sales 200000 260000

Less Cost of Goods Sold
Finished Goods Opening 0 53840
Add Cost of Goods Manufactured
Direct Material ($1) 28000 22000
Direct Labour ($2) 56000 44000
Factory Overhead - Variable ($1.5) 42000 33000
Factory Overhead - Fixed 62440 62440
Cost of Goods Manufactured 188440 161440
Cost of Goods Available for Sales 188440 215280
Less Finished Goods Ending 53840 29360
Cost of Goods Sold 134600 185920
Gross Profit 65400 74080
 Less Marketing & Admin Exp 25000 28000
NET PROFIT 40400 46080

Q#6 Absorption
Sales (75000X10) 750000
Less Co st of Goods Sold

Finished Goods Opening (12000X6) 72000

Add Cost of goods Manufactured (80000X6) 480000
Cost of goods availabe for sales 552000
Less Finished goods Ending (17000X6) 102000
Cost of goods sold 450000
Gross Profit 300000
Less Variable Marketing & Admin Expenses (75000X1) 75000
Less Fixed Marketing & Admin Expenses 150000 225000
Net Profit 75000

Direct Costing
Sales (75000X10) 750000
Less Variable Co st of Goods Sold

Finished Goods Opening (12000X4) 48000

Add Cost of goods Manufactured (80000X4) 320000
Cost of goods availabe for sales 368000
 Less Finished goods Ending (17000X4) 68000
Variable Cost of goods sold 300000
Gross Contribution Margin 450000
Less Variable Marketing & Admin Expenses (75000X1) 75000
Net Contribution Margin 375000
Less Fixed Expenses
Fixed FOH 160000
Less Fixed Marketing & Admin Expenses 150000 310000
Net Profit 65000

b) 5000 x 2 = 10000
 2
8
10
Manufactured Units 24000
Sold Units 20000
Ending Units 4000

Unit Cost 336000 24000 14

Finshed Goods Ending

4000 14 56000

Manufactured Units 24000

Sold Units 20000
Ending Units 4000
Unit Cost 240000 24000 10

Finshed Goods Ending

4000 10 40000
 COMPUTATIONS

Manufactured Units 28000

Sold Units 20000
Ending Units 8000

Unit Cost 188440 28000 6.73

Finshed Goods Ending

8000 6.73 53840

Fixed Marketing 15000

Variable Marketing 5% of 200000 10000
 25000

Opening 8000
Manufactured Units 22000
Total 30000
Sold Units 26000
Ending Units 4000

Unit Cost 161440 22000 7.34

Finshed Goods Ending

4000 7.34 29360

Fixed Marketing 15000

Variable Marketing 5% of 260000 13000
28000

Sales 75000
Ending 17000
Opening -12000
Manufactu 80000

Variable 4
Fixed 2
Total 6