Biotech Ltd produces memory discs at its factory. The following information relates to the production...
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Accounting
Biotech Ltd produces memory discs at its factory. The following information relates to the production of memory discs for the period ending 31 March 2020.
Production
Sales
(Units)
(Units)
Budget
90,000
87,000
Actual
96,000
93,000
Variable Prod.
Fixed Prod.
Fixed Selling
Cost
Overhead
Overhead
$
$
$
Budget
4,500,000
900,000
675,000
Actual
4,800,000
937,500
675,000
The fixed production overhead was absorbed at a pre-determined rate per unit produced. One memory disc was sold for $130. At the beginning of April 2019, there was opening inventory of 5,250 units valued at $315,000; this includes fixed production overhead of $52,500.
Required:
a. Prepare a marginal costing income statement for the company.
[3 marks]
b. Prepare an absorption costing income statement for the company.
[8 marks]
c. Reconcile the income under both statements.
[2 marks]
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