Variable Costing Method Assignment
QUESTION 1 25 MARKS Namib Processor Limited makes and sells one product. The standard production cost per unit is as follows NS Direct Labour 3 hours N$ 6 per hour 4 kg N$ 7 per kg 18 Direct Material 28 Production overhead Variable 3 Production overhead Fixed 20 Standard Production cost 69 Normal output is 16 000 units per annum and this figure is used for the fixed production overhead calculation, Cost relating to selling, distribution and administration are:
Variable is 20 % of sales value Fixed is N$ 180 000 per annum The only variance is a fixed production overhead volume variance. There are no units in finished goods stock at 1 October 2017. The fixed overhead expenditure is spread evenly throughout the year. The selling price per unit is NS 140.00 The number of units to be produced and sold for the two six-monthly period detailed bellow is budgeted as follows months ending 31 March Six months ending 30 September 7 000 Six 7 7 Production 8 500 Sales 7 000 8 000 REQUIRED: 1.1 Prepare the statements of comprehensive income for the two six-monthly periods as per, (a) Variable costing method (b) Absorption costing method (e) Reconcile the profit between the two methods (S) (10) (10) Page 9 of 14. .