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Poynder and Park plan to manufacture a new product for use in the underwater construction...

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Accounting

Poynder and Park plan to manufacture a new product for use in the underwater construction industry. This product will be sold for $34.00 per unit. The following are the unit costs of the product: i. Direct Materials $11.00 ii. Direct labour 15 minutes per unit at $8.00 per hour iii. Variable factory overhead Absorbed at $14.00 per direct labour hour. iv. Fixed factory overhead $3 040 for the 6 months ended 30 June 2011. To be absorbed at a rate per unit. v. Expected production and sales for the 6 months ended 30 June 2011 are: vi, Production (units) 380 vii, Sales (units) 365 Additional costs will be: Sales commission per unit sold $1.00 Fixed administrative costs $2 500 per annum REQUIRED: A. Prepare a detailed forecast Income Statement (profit and loss account) for the six months ended 30 June 2011, using marginal costing. (13 marks) B. Prepare a detailed forecast Income Statement (profit and loss account) for the six months ended 30 June 2011, using absorption costing. (10 marks) C. Prepare a statement to reconcile the profit in A. with the profit in B. (2 marks)

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