absorption costing questions and answers pdf

Absorption costing questions and answers pdf

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Absorption costing and variable costing

Absorption costing and variable costing

Step in using absorption costing are:

Absorption costing and variable costing

The following data relates to the performance of the entity during October. Profit Rs. All overhead costs are fixed costs. Required Calculate: a the actual production overhead cost for October b the profit that would have been reported in October if Entity T had used marginal costing. Currently, it uses absorption costing to measure profits and inventory values. The budgeted production cost per unit is as follows: Rs. Direct labour 3 hours at Rs. There were no units of finished goods inventory at 1 October Year 5.

The fixed overhead expenditure is spread evenly throughout the year. The selling price per unit is Rs. For the two six-monthly periods detailed below, the number of units to be produced and sold are budgeted as follows: Six months ending Six months ending 31 March Year 6 30 September Year 6 Production 8, units 7, units Sales 7, units 8, units.

The entity is considering whether to abandon absorption costing and use marginal costing instead for profit reporting and inventory valuation.

Required a Calculate the budgeted fixed production overhead costs each year. The company budgeted the following information for the month of January 20X4: Normal capacity units 27, Variable costs per unit: Production Rs. The cost of opening finished goods inventory determined under the absorption costing method system was Rs. Required a Prepare profit statements for the year, under absorption and marginal costing systems.

Relevant information relating to the year ended June 30, 20X3 is as under: Raw material per unit 5 kg at Rs. Payment will be made to the consultant at Rs. Fixed overheads are allocated on the basis of machine hours. The closing stocks are valued on FIFO basis. Required a Prepare a budgeted profit and loss statement for the year ending June 30, 20X4 under marginal and absorption costing.

The estimated selling price is Rs. Proof: Rs. Since expenditure occurs evenly throughout the year, the budgeted production overhead expenditure is Rs. Sales at Rs. Since budgeted output in each six-month period is different from the normal volume, there will be some under- or over-absorption of production overhead in each six-month period.

Six months to Six months to 30 31 March September Units sold 7, 8, Six months to 31 March Year 6 Reduction in inventory 7, — 8, units 1, units Production overhead absorbed in Rs. Selling and administrative expenses 22, x 25 , 3,, Contribution Margin 2,, Less: Fixed costs Production , Selling and administrative expense , 1,, Net Profit 1,, Rupees Sales 22, units Rs.

Cost of Goods Sold Cost of production 24, x Rs. Selling expenses Rs. W Rupees Variable overhead per unit Fixed overhead per unit Rs. W Units Budgeted production - Normal capacity 27, Actual production 24, Under-utilized capacity 3, Less: Closing stock under-valued in marginal costing Rs. Add: Opening stock under-valued in marginal costing Rs. Absorption costing: Rupees Sales [, x Rs. Open navigation menu.

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Absorption costing and variable costing

Previous Lesson: Factory Overhead. Next Lesson: Product Costing Systems. In Absorption Costing , the product, services or activities are charged with a fair share of indirect cost. There are four-step process involved in charging overhead cost to product or services:. Overhead allocation is first of the three stages in establishing a full cost for a product or services. Overhead allocation is the process of charging a whole item of cost to a cost centre.

The following data relates to the performance of the entity during October. Profit Rs. All overhead costs are fixed costs. Required Calculate: a the actual production overhead cost for October b the profit that would have been reported in October if Entity T had used marginal costing. Currently, it uses absorption costing to measure profits and inventory values.

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Step in using absorption costing are:

You have reached 0 of 0 points, 0. Which of the following costs is not included while computing unit product cost under variable costing? Your answer is correct. Your answer is incorrect.

Learn capacity analysis and inventory costing Multiple Choice Questions and Answers MCQs , "Absorption Costing" quiz questions and answers for online classes business administration. Practice merit scholarships assessment test, online learning absorption costing quiz questions for competitive exams in business majors for online BBA degree. Absorption Costing Video.

4 comments

  • Malik H. 05.06.2021 at 04:58

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  • Marcelle D. M. 09.06.2021 at 19:04

    OBJECTIVE OF ABSORPTION COSTINGThe management is interested that every product should bear its total cost, be it fixed or variable cost and leave.

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