Problem
The manufacturing company NINA, manufactures living and dining room furniture. During the month of May 2.018, I provide the following data regarding its production:
|
|
January
|
February
|
|
Variable cost production Materials
|
200
|
210
|
|
Variable Production Costs Labor
|
150
|
180
|
|
Indirect variable costs
|
60
|
65
|
|
Fixed Indirect Costs per unit
|
150
|
150
|
|
Fixed administrative expenses
|
1.500.000
|
1.600.000
|
|
Variable administrative expenses
|
100
|
98
|
|
Variable Selling Expenses
|
50
|
55
|
|
Fixed Selling Expenses
|
760.000
|
780.000
|
|
Units produced. Finished
|
18.000
|
19.000
|
|
Units Produced and Sold
|
15.000
|
15.500
|
|
Unit Sale Price
|
1.200
|
1.300
|
Prepare a comparative analysis between the direct method and the variable absorption method and make suggestions for the best decision making regarding which system should be implemented in this company.