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Biotech Ltd produces memory discs at its factory. The following information relates to the production...

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Question

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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