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  • Marwa Year 1 Using Marginal Costing Approach

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    Mak Puss
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    The document presents income statements for 3 years using marginal costing. It shows sales, variable and fixed costs, and calculates gross profit and net profit. In year 1, net profit was £56,376. In year 2, net profit increased to £100,886 as sales grew. In year 3, net profit decreased slightly to £77,922 as sales declined from the previous year. Closing stock is calculated each year based on opening stock and production/sales levels. Marginal cost of sales is used to determine gross profit for each period.

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    P3-MARGINAL-FORMAT-2-1.xlsx

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    The document presents income statements for 3 years using marginal costing. It shows sales, variable and fixed costs, and calculates gross profit and net profit. In year 1, net profit was £56,376. In year 2, net profit increased to £100,886 as sales grew. In year 3, net profit decreased slightly to £77,922 as sales declined from the previous year. Closing stock is calculated each year based on opening stock and production/sales levels. Marginal cost of sales is used to determine gross profit for each period.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    25 views6 pages

    Marwa Year 1 Using Marginal Costing Approach

    Uploaded by

    Mak Puss
    The document presents income statements for 3 years using marginal costing. It shows sales, variable and fixed costs, and calculates gross profit and net profit. In year 1, net profit was £56,376. In year 2, net profit increased to £100,886 as sales grew. In year 3, net profit decreased slightly to £77,922 as sales declined from the previous year. Closing stock is calculated each year based on opening stock and production/sales levels. Marginal cost of sales is used to determine gross profit for each period.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 6

    Marwa year 1

    Using Marginal Costing Approach


    ITEM Number of units £ P.U. AMOUNT £ AMOUNT £

    SALES 3,000 92 276,000

    MARGINAL COST OF SALES .. .. .. ..

    OPENING STOCK 0 0
    ADD: VARIABLE PRODUCTION COST: .. .. .. ..

    Direct Material 3600 17 61200

    Direct Labour 3600 11 39600

    Variable Expenses 3600 7 25200


    Total Variable Cost A 126000

    Less: Closing stock at end of year 1. [Opening


    stock units+units produced - units sold] find £
    value. B 0+3600-3000=600 35 21000

    Marginal Cost of SALES A-B 105000

    Fixed indirect production cost 84000


    Gross Profit: sales - MCOS -FIXED
    PRODUCTION COST 87000

    Selling and Distribution Overheads 5700

    Admin Overheads 10500

    Profit Before Interest & Tax (PBIT) 70800

    Interest Expenses 1200


    Probit Before Tax [PBIT-interest] 69600

    Tax @19% 13224

    Net Profit: profit before tax - tax 56376

    Year 1: Closing stock calculation -Using formula Opening stock units+units produced - units sold*variable production cost
    (0+3600-3000)*35
    Closing units 600
    Closing Stock (amount) 21000
    Income statement for Year 2
    Using Marginal Costing Approach
    ITEM Number of units £ P.U. AMOUNT £ AMOUNT £

    SALES 4,000 92 368,000


    MARGINAL COST OF SALES .. .. .. ..
    OPENING STOCK 600 21000
    ADD: VARIABLE PRODUCTION COST: .. .. .. ..

    Direct Material 4100 17 69700

    Direct Labour 4100 11 45100

    Variable Expenses 4100 7 28700

    Total Variable Cost A 164500

    Less: Closing stock at end of year 2. [Opening


    stock units+units produced - units sold] B 600+4100-4000=700 35 24500

    Marginal Cost of SALES A-B 140000

    Fixed indirect production cost 84000


    Gross Profit: sales - MCOS -FIXED
    PRODUCTION COST 144000

    Selling and Distribution Overheads 7500

    Admin Overheads 10500

    Profit Before Interest & Tax (PBIT) 126000

    Interest Expenses 1450

    Probit Before Tax [PBIT-interest] 124550

    Tax @19% 23645.5

    Net Profit : profit before tax - tax 100,886

    Year 2: Closing stock calculation Opening stock units+units produced - units sold*variable production cost
    use formula (600+4100-4000)*35
    Closing units 700
    Closing Stock (amount) 24500

    Income statement for Year 3


    Using Marginal Costing Approach
    ITEM Number of units £ P.U. AMOUNT £ AMOUNT £
    SALES 3,500 92 322,000
    MARGINAL COST OF SALES .. .. .. ..
    OPENING STOCK 700 35 24500
    ADD: VARIABLE PRODUCTION COST: .. .. .. ..
    Direct Material 3400 17 57800
    Direct Labour 3400 11 37400
    Variable Expenses 3400 7 23800
    Total Variable Cost A 143500
    Less: Closing stock at end of year 2. [Opening
    stock units+units produced - units sold] B 600 35 21000
    Marginal Cost of SALES A-B 122500
    Fixed indirect production cost 84000
    Gross Profit: sales - MCOS -FIXED
    PRODUCTION COST 115500
    Selling and Distribution Overheads 7100
    Admin Overheads 10500
    Profit Before Interest & Tax (PBIT) 97900
    Interest Expenses 1700 96200
    Probit Before Tax [PBIT-interest]
    Tax @19% 18278
    Net Profit : profit before tax - tax 77922

    Year 3: Closing stock calculation Opening stock units+units produced - units sold*variable production cost
    use formula (700+3400-3500)*35
    Closing units 600
    Closing Stock (amount) 21000
    126000/3600*600=21000

    126000-21000=105000

    276000-105000-84000=87000

    87000-5700-10500=70800

    70800-1200=69600

    69600*0.19=13224

    69600-13224=56376

    ble production cost


    164500

    143500

    164500-24500=140000

    368000-140000-84000=144000

    144000-7500-10500=126000

    ble production cost

    3500*92=322000

    700*35=24500 s

    3400*17=57800 t
    3400*11=37400 y
    3400*7=23800 z
    s+t+y+z=A
    600*35=2100 B
    A-B

    322000-122500-84000=115500

    115500-7100-10500=97900
    97900-1700=96200

    96200-18278=77922

    ble production cost

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