In: Accounting
Bush Wood Farm produce a certain type of natural herb immune booster which is sold at N$30 per unit:
N$ per unit | |
Direct materials | 6.00 |
Direct labour | 7.50 |
Variable overheads | 2.50 |
Fixed overhead absorption rate | 5.00 |
21.00 |
Budgeted production for the month was 5 000 units although the company managed to produce 5 800 units, selling 5 200 of them and incurring fixed overhead costs of N$27 400.
What is the absorption costing profit or loss for the month?
Select one:
a. None of all
b. N$45 400
c. N$48 400
d. N$45 200
e. N$46 800
Income Statement under absorption costing | |||
Working | Amount $ | ||
Opening Inventory | a | 0 | |
Unit produced | b | 5800 | |
Unit Sold | c | 5200 | |
Closing Inventory | d=a+b-c | 600 | |
Sales | e=c*$30 | $ 1,56,000 | |
Cost of good sold | |||
Opening Inventory | f | $ - | |
Direct material | g=b*$6 | $ 34,800 | |
Direct Labour | h=b*$7.5 | $ 43,500 | |
Variable manufacturing OH | i=b*$2.5 | $ 14,500 | |
Fixed Manufacturing OH Cost | j | $ 27,400 | |
Cost of good manufactured | k=g+h+i+j | $ 1,20,200 | |
Less : Closing Inventory | l=k/b*d | $ 12,434 | |
Less: Cost of good sold | m=f+k-l | $ 1,07,766 | |
Gross Profit | n=e-m | $ 48,234 | |
Less : Selling expenses | |||
Variable Selling & Admin | o | ||
Fixed marketing cost | p | ||
Net Operating Income/(loss) | q=n-o-p | $ 48,234 | |