Question:
The table below sets out data for the Mobile Phone Manufacturing Company for the four quarters of Year 1.
|
|
£
|
|
Selling price per unit
|
120
|
|
Variable cost per unit
|
70
|
|
Fixed overhead production cost for each quarter
|
20,000
|
|
|
Qtr 1
units
|
Qtr 2
units
|
Qtr 3
units
|
Qtr 4
units
|
Total
|
|
|
Planned production
|
1,000
|
1,000
|
1,000
|
1,000
|
4,000
|
|
|
Actual production
|
1,000
|
1,000
|
900
|
1,100
|
4,000
|
|
|
Actual sales
|
900
|
1,100
|
900
|
1,100
|
4,000
|
|
|
|
|
|
|
|
|
|
|
The fixed overhead production cost for each month is based on budgeted production of 1,000 units per quarter. The fixed overhead is absorbed into products on the basis of a predetermined overhead rate of £20 per unit. Actual production fluctuates in quarters 3 and 4 due to labour problems. Actual sales fluctuate each quarter due to seasonal factors but the company meets its target for production and sales over the year as a whole.
Required
Prepare a statement of quarterly profit for each of the four quarters of Year 1 using:
(a) absorption costing; and
(b) marginal costing.