Question 1
Absorption cost per unit
Variable cost 3.70
Fixed overhead cost 2.90
Absorption cost 6.60
Inventory units
Period 1 Period 2
Opening stock 0 400
Production 12 000 12 300
Closing stock (400) (300)
Cost of sales 11 600 12 400
Statement of comprehensive income for period 1 using absorption costing
Sales (8.5 x 11 600) 98 600
Total production cost of sales (76 560)
Opening stock 0
Production cost (6.6 X 12 000) 79 200
Less closing inventory (400 X 6.6) (2 640)
Gross profit 22 040
Less non-production overheads (16 800)
Net profit 5 240
Absorption cost per unit
Variable cost 3.70
Fixed overhead cost 2.90
Absorption cost 6.60
Inventory units
Period 1 Period 2
Opening stock 0 400
Production 12 000 12 300
Closing stock (400) (300)
Cost of sales 11 600 12 400
Statement of comprehensive income for period 1 using absorption costing
Sales (8.5 x 11 600) 98 600
Total production cost of sales (76 560)
Opening stock 0
Production cost (6.6 X 12 000) 79 200
Less closing inventory (400 X 6.6) (2 640)
Gross profit 22 040
Less non-production overheads (16 800)
Net profit 5 240
