Management Accounting: Marginal and Absorption Costing Techniques

7 Pages838 Words71 Views

Added on 2023-01-19

About This Document

This document discusses the concepts of marginal costing and absorption costing in management accounting. It explains how these techniques are used to calculate profit or loss statements and compares the differences between the two methods. The document also explores the relevance of these techniques in cost accounting.

Management Accounting: Marginal and Absorption Costing Techniques

Added on 2023-01-19

Related Documents

MANAGEMENT ACCOUNTING

TABLE OF CONTENTS
QUESTION 5...................................................................................................................................1
QUESTION 6...................................................................................................................................3
QUESTION 7...................................................................................................................................3

Management Accounting: Marginal and Absorption Costing Techniques_2

QUESTION 5
Calculating and producing income statement using marginal and absorption costing techniques.
Marginal Costing
Profit or loss statements using Marginal costing
January
Februar
y March
Sales Revenue
(12000*1
50) 1800000
(14000*1
50) 2100000
(11000*1
50) 1650000
Marginal cost of sales
Direct materials
(15000*5
0) 750000 600000 500000
Direct Labour
(15000*1
5) 225000 180000 150000
Variable production
overhead
(15000*4
) 60000 60000 50000
1035000 840000 700000
Add: Opening Stock 0 207000 140000
Less: Closing
inventory
(3000/15
000)*103
5000 207000 828000 140000 907000 70000 770000
Contribution 972000 1193000 880000
Fixed production
overhead 24000 24000 24000
Selling cost Fixed 3000 3000 3000
Selling cost variable
(12000*4
) 48000 75000 56000 83000 44000 71000
Net Income 897000 1110000 809000
Absorption Costing
Profit or loss statements using Absorption costing
January
Februar
y March
Sales Revenue
(12000*1
50) 1800000
(14000*1
50) 2100000
(11000*1
50) 1650000
Marginal cost of sales
Direct materials (15000*5 750000 600000 500000
1

Management Accounting: Marginal and Absorption Costing Techniques_3

End of preview

Want to access all the pages? Upload your documents or become a member.