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2 years ago

Company Q incurred manufacturing costs for the year as follows:

Business

1 answer:

masha68 [24]2 years ago

6 0

The Net income of the Income statement under the absorption costing equals Sh 14,000.

<h3>What is Direct materials?</h3>

= 1,000 x 10

= Sh 10,000

<h3>What is Direct labor?</h3>

= 1,000 x 7

= Sh 7,000

<h3>What is Variable manufacturing overhead?</h3>

= 1,000 x 3

= Sh 3,000

<h3>What is Fixed manufacturing overhead</h3>

= 1,000 x (7,500 / 1,500)

= Sh 5,000

Company Q

Income Statement

Revenue (1,000 x 45) 45,000

<u>Cost of goods sold:</u>

Direct materials 10,000

Direct labor 7,000

Variable Manufacturing overhead 3,000

Fixed manufacturing overhead <u>5,000</u> <u>(25,000)</u>

Gross Margin 20,000

Variable Selling and admin expenses 2,000

Fixed Selling and admin expenses 4,000

Total Selling and admin expenses <u>(6,000)</u>

Net Income <u>14,000</u>

<u />

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