Question - A Company produces a single product.
The following is the budget for the product Budget
i) Selling price Ksh.10
ii) Direct material cost per unit Ksh.3
iii) Direct wages per unit Ksh.2
iv) Variable overhead per unit Ksh.1
v) Fixed production overhead Ksh.10,000 per month
vi) Production volume 5,000 units per months
Actual
i) Production 6,000 units
ii) Sales 4,800 units
iii) Assume that all costs were as budgeted
Required - Prepare a profit statement using:
i) Absorption costing
ii) Marginal costing
iii) Prepare a reconciliation statement to reconcile the two reported profit figures under absorption and marginal costing.