Questions and Answers
What is the budgeted capacity of the Woolery Manufacturers Ltd?
What is the selling price per unit of the product?
What is the total cost per unit?
What is the difference between the production and sales volumes?
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What is the estimated fixed selling cost?
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What is the concept of over/under absorption of overheads related to?
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Study Notes
Company Information
- Woolery Manufacturers Ltd has a budgeted capacity of 30,000 units.
- The company sells one unit of its product for $800.
Cost Structure
- Direct materials cost per unit: $200
- Direct labour cost per unit: $150
- Variable overheads cost per unit: $50
- Total variable costs per unit: $400
- Fixed production overheads (O/H) per unit: $80
- Total costs per unit: $480
Production and Sales
- Production: 40,000 units
- Sales: 35,000 units
- Opening stocks: 10,000 units
- Closing stocks: 15,000 units
Fixed Costs
- Fixed selling costs: $2,000,000
- Fixed administrative costs: $1,000,000
Requirements
- Determine marginal cost per unit
- Compute contribution margin per unit
- Prepare income statement using Marginal costing principles
- Prepare income statement using Absorption costing principles
- Explain the concept of over/under absorption of overheads
- Reconcile profit under both methods
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Description
This quiz is about managerial accounting, focusing on cost per unit, production, and sales. Calculate the budgeted capacity and total costs per unit. Apply your knowledge of direct materials, direct labor, variable overheads, and fixed production overheads.
