The following data relate to a company which makes and sells computers.
|
|
March 2009 |
April 2009 |
|
Production Volume |
10,000 units |
5,000 units |
|
Sales Volume |
5,000 units |
10,000 units |
|
Selling Price per unit |
Rs. 100 |
Rs. 100 |
|
Variable Production Cost per unit |
Rs. 50 |
Rs. 50 |
|
Fixed Production Overheads Incurred |
Rs. 1,00,000 |
Rs. 1,00,000 |
|
Fixed Production Overheads per unit, being predetermined |
Rs. 10 |
Rs. 10 |
|
Overhead Absorption rate |
||
|
Selling, Distribution & Administration Cost (all fixed) |
Rs. 50,000 |
Rs. 50,000 |
You are required to present a Comparative Profit Statement for each month using: (i) Absorption Costing technique; and (ii) Marginal Costing technique. Comment on the following statement using the figures contained in your answer: (iii) Marginal Costing rewards sales whereas Absorption Costing rewards production.