50.1K
Verified Solution
Link Copied!
Please find Profit using Absorption, Marginal Costing and Activity-based Costing for year 2018.
Table 1 Item 007, Prices and Production, 2012 2018
| Year | Volume of Production (meters) | Price (Rs) |
| Industry total | Gul Ahmed | Competitor | Gul Ahmed |
| 2012 | 610,000 | 213,000 | 20 | 20 |
| 2013 | 575,000 | 200,000 | 20 | 20 |
| 2014 | 430,000 | 150,000 | 15 | 15 |
| 2015 | 475,000 | 165,000 | 15 | 15 |
| 2016 | 500,000 | 150,000 | 15 | 20 |
| 2017 | 625,000 | 125,000 | 15 | 20 |
| 2018 | 700,000 | 175,000 | 15 | 15 |
| Production volumes | 75,000 | 100,000 | 125,000 | 150,000 | 175,000 | 200,000 |
| Direct Labor | 4 | 3.9 | 3.8 | 3.7 | 3.8 | 4 |
| Material | 2 | 2 | 2 | 2 | 2 | 2 |
| Material Spoilage | 0.2 | 0.2 | 0.19 | 0.19 | 0.19 | 0.2 |
| Department expense | | | | | | |
| Direct | 0.6 | 0.56 | 0.50 | 0.50 | 0.50 | 0.50 |
| Indirect | 4 | 3 | 2.4 | 2 | 1.71 | 1.5 |
| General Overhead | 1.2 | 117 | 1.14 | 1.11 | 1.14 | 1.2 |
| Factory cost | 12 | 10.83 | 10.03 | 9.50 | 9.34 | 9.40 |
| Selling and admin exp. | 7.8 | 7.04 | 6.52 | 6.18 | 6.07 | 6.11 |
| Total cost | 19.8 | 17.87 | 16.55 | 15.66 | 15.41 | 15.51 |
Should the price for 2018 be kept at 15 Rs or should it be increased to 20 Rs?
Answer & Explanation
Solved by verified expert
