Manufacturing and trading accounts for the years


Problem:

The Baked Bean Butty Company has in the past used absorption costing in valuing stocks.

The company’s new accountant feels that a marginal costing approach would be preferable. The following figures have been made available to you for the years ended 30 April 1999 and 30 April and 30 April 2000.

Year ended                                    30 April 1999            30 April 2000

                                                            $                             $

 Unit Costs

Direct Materials                                    0.17                         0.19

 

Direct Labour                                        0.12                        0.14

Variable Overheads                               0.08                         0.09

Selling Price per Unit                              0.90                         0.95

Fixed Factory Overhead                         29,900                     31,850


Sales Units                                          220,000                    240,000

Production Units                                   230.000                    245,000


Opening Stock on 1 May 1998 was 8000 units at a total cost of $0.50 per unit.

Draw up the Manufacturing and Trading accounts for the years ended 30 April 1999 and 30 April 2000, using

1. Absorption Costing

2. Marginal Costing

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Accounting Basics: Manufacturing and trading accounts for the years
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