Question: Your organisation produces/sells a single product. Details on the product are given below.
£
Selling price £35
Unit costs
Direct materials £6
Direct Labour £5
Variable Production overhead £2
Variable sales overhead £1
Budgeted production for the period 600 units
Fixed costs for the month are given below
Budgeted cost Actual cost
Production overhead £1,800 £2,000
Administration cost £800 £700
Selling cost £400 £600
Budgeted sales for the period were 450 units but the actual sales were 600 units. There was no opening stock and actual production for the month was 700 units
Calculate costs using appropriate techniques of cost analysis to prepare an income statement of marginal and absorption costing using the data provided below and explain the differences between them.