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Tobiaz Ltd. manufactures beds for students in a private hostel. The following information
relates to the activities of the company from January to June 2014:
GHS
Selling price per unit of product 2,000
Variable cost per unit of product 800
Fixed manufacturing cost (1 month) 300,000
Non-manufacturing cost (1 month) 100,000
There were no opening stocks in January.
Normal production level in Tobiaz Ltd is expected to be 1,500 beds per month, and
production and sales for the period to June 2014 is presented below:
January February March April May June
Units sold 1,500 1,200 1,800 1,500 1,400 1,600
Units produced 1,500 1,500 1,500 1,500 1,700 1,400
Required:
i. Prepare Income Statement for Tobiaz Ltd for each month based on the :
? Marginal Costing
? Absorption Costing System
ii. Explain the difference in profit of the two methodsThere is no point in setting me a test question and expecting a full answer, because that is not what we are here for!!!
You should be using a Revision Kit from one of the ACCA approved publishers – they have exam standard questions together with answers and workings.
Ask about whatever it is in the answer that you are not clear about, and then I will help you.All that is needed for this question is covered in my free lectures, and I am not going to type them all out here.
The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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