You have the following information regarding AJH Company: Sales 25,000 units per year at $45 per...

3.7 Ratings (551 Votes)

	Income statement for 2004 :

1	Absorption costing :

	sales (25,000 units *45 per unit)		1125000

	marginal cost of sales
	direct materials (30,000 *12)	360000
	direct labour (30,000*10)	300000
	variable manufacturing overheads costs (30,000*8)	240000
	fixed manufacturing overhead costs	150000	1050000

	gross profit		75000

	Marketing costs variable (30,000*3)	90000
	administrative costs fixed	75000	165000

	Net Profit/Loss		-90000


2	Marginal costing:

	sales (25,000 units *45 per unit)		1125000
	Less:
	marginal cost of sales
	direct materials (30,000 *12)	360000
	direct labour (30,000*10)	300000
	variable manufacturing overheads costs (30,000*8)	240000
	Marketing costs variable (30,000*3)	90000	990000

	contribution		135000
	Less:
	fixed manufacturing overhead costs	150000
	administrative costs fixed	75000	225000

	Net Profit/Loss		-90000


3	Throughput costing :

	sales (25,000 units *45 per unit)		1125000
	Less:
	Cost of goods sold (30,000 *12)		360000
	Throughput contribution		765000
	Less:
	direct labour (30,000*10)	300000
	variable manufacturing overheads costs (30,000*8)	240000
	fixed manufacturing overhead costs	150000
	Marketing costs variable (30,000*3)	90000
	administrative costs fixed	75000	855000

	Net Profit/Loss		-90000

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