(SOLVED) Porter Ltd began operation on 1 January and achieved the


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Porter Ltd began operation on 1 January, and achieved the following results for the year:
Sales …………………………………………. 36 000 units
Selling price …………………………………… $45 per unit
Manufacturing costs:
Direct material ………………………………… $12 per unit
Variable overhead …………………………….. $6 per unit
Fixed manufacturing costs:
Variable ………………………………………. $3 per unit sold
Fixed …………………………………………. $30 000
Production ……………………………………. 37 500 units
Required:
1. Prepare an absorption costing income statement for Porter Ltd.
2. Prepare a variable costing contribution margin statement for Porter Ltd.
3. Reconcile the differences between the profits under the two statements by:
(a) Identifying the areas where the statements differ.
(b) Using the short-cut method.

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