Question on Marginal and Absorption Costing Technicques

 Questions on Marginal Costing Techniques

Your name Nig. Ltd presents you with the following data about its operations for the quarter ended 31/12/2015

  • Selling price per liter N50
  • Direct material per liter N20
  • Direct labor per liter N15
  • Variable production overhead per liter N5
  • Fixed production overhead cost N600,000
  • Other fixed costs N100,000
  • Sales commission per liter N3
  • Quantity sold 180,000 liters
  • Closing stock 80,000

You are required to prepare an income statement for the quarter ended 31/12/2015 using:

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  1. Absorption Costing Technique.
  2. Marginal Costing Technique.
  3. Show reconciliation of profit between the two methods.

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