08 Activity 02
08 Activity 02
08 Activity 02
BSBA-OM 201A
LeaveLand Group
LeaveLand Group desires to determine the gross margin associated with their production using marginal
and absorption costing. The operating statistics of the company were as follows:
The following are the cost structure per unit of output produced:
Direct Materials P5
Direct Wages 5
Variable Overhead 5
Fixed Overhead 6
A. Closing stock
Closing Stock= Unit Produced – Unit Sold
= 8,000 – 3,000
= 5,000
Marginal costing
B. Marginal Costing Product= Direct Material + Direct Wages + Variable Overhead
=5+5+5
= 15
Absorption costing
C. Total Cost of the Product= Direct Material + Direct Wages + Variable Overhead + Fixed Overhead
=5+5+5+6
= 21
D. Amount of sales value
Amount of sales value= Unit Sold × Selling Pricing Per Unit
= 3,000 × 100
= 300,000
Marginal Costing
E. Opening Stock= Unit Produced × Marginal cost of Production
= 8,000 × 15
= 120, 000
Closing Stock= Unit Sold × Marginal cost of Production
= 3,000 × 15
= 45,000
JAVELLANA JESSEL G. BSBA-OM 201A
Absorption Costing
F. Opening Stock = Unit Produced × Total cost of Production
= 8,000 × 21
= 168,000
Closing Stock = Unit Sold × Total cost of Production
= 3,000 × 21
= 63,000
Marginal Costing
G. Contribution margin and gross profit using marginal costing
Contribution Margin = Amount of Sales Value- (Opening Stock – Closing Stock)
= 300,000 – (120,000 – 45,000)
= 300,000 – 75,000
= 225,000
Gross Profit= Contribution margin – Fixed Overhead
= 225 – 30,000
= 195,000
Absorption Costing
H. Gross profit using absorption costing
Gross profit = Amount of Sales Value – (Opening Stock – Closing Stock)
= 300,000 – (168,000 – 63,000)
= 300,000 – 105,000
= 195,000