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Absorption Costing Method and Marginal Costing Method
A company's normal capacity utilization is reckoned as 90%, it has a production capacity of 200000 units per year. Standard variable production cost and the variable selling cost are Rs. 11 and Rs. 3 per unit respectively. However the fixed cost and the fixed selling cost are rs. 360000 and Rs. 270000 per year respectively. The unit selling price is Rs. 20. In the year just ended on 31 December 2006, the production was 160000units and the sale was 150000 units. The closing inventory on 31st Dec was 20,000 units. The actual variable production costs for the year were Rs. 35,000 higher than the standard.
Calculate the profit for the year, a) Marginal costing method. b) absorption costing method |
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