Marginal Costing Statement

May June
RM RM
Sales (RM50 selling price per unit 15000 25000
x no of sale items)
Less: Cost of Production
Opening Inventory 0 1920
Plus: Variable cost of production 8000 6080
(Rm16 X no of production units) Direct material cost + Direct labour cost
Minus: Closing inventory (VC
Rm16 Per unit X no of closing inv -3200 0
units) Use variable per unit x no of units of closing inv
Marginal Cost of Production 4800 8000 reduction from revenue (pls remember to minus)

Contribution Margin (Sales Minus

10200 17000
Marginal Cost of Production)
For decision making purposes, should produce. All numbers +ve
Less: Manuf fixed cost 6000 6000 Overhead (Fixed Manuf and Non manuf cost is parked here)
Less: Non manuf fixed cost 750 1250 Overhead (Fixed Manuf and Non manuf cost is parked here)
Net Profit (CM - Fixed Cost) 3450 9750

Variable cost of Production RM

Direct materials 8
Direct labour 5
Variable manuf overhead 3
Total variable cost per unit 16
 May-10 Jun-10
Sale (units) 300 500
Made-Production (Units) 500 380

Closing stock Difference - Units -200 120

(Sale units minus production units)

ce. All numbers +ve

is parked here)
is parked here) Valuation of closing inventory -3200 1920
(Variable cost GBP6 only x no of units)
Absorption Costing Statement
GG PLC
May-10 Jun-10
RM RM
Sales (RM? selling price per unit x 15000 25000
no of sale items) Selling price RM16 x OAR per unit RM10
Less: Cost of Production
Opening Inventory 0 5200
Full cost produced (RM? X no 13000 9880
actual of production units)
Minus: Closing inventory (Total
Cost Rm? X no of closing inv -5200 3120
units)
(Over)/Under absorption of 1000 -200
manuf fixed overhead Extra step calculation
Cost of Production 8800 18000 reduction from revenue (pls remember to minus)
Profit Contribution 6200 7000
Manufacturing fixed cost 0 0 Non shown because as part of Cost of production
Non manufacturing fixed cost -6750 -7250
Net Profit (Profit Contrib- Non -550 -250
manuf Fixed Cost)

Working
Full cost of Production
Direct materials
Direct labour
Variable manuf overhead
Fixed production overhead
Total cost of production
RM Non manufacturing fixed cost
8 Fixed selling
5 Fixed admin
3 Variable sales commission - 5% of sales
10 May 2010 Total Non Manuf FC
26
member to minus)

Cost of production

RM
4000
2000
750
6750
 May-10 Jun-10
300 500
Sale (units)
Made-Production (Units) 500 380

-200 120
Closing stock Difference - items

(Sale unit minus made unit)

Calculate OAR RM
Fixed manufacturing OH/No of prod units 10

(RM?/no of production units) = (RM4000 / 400 units) per unit

Variable cost RM16 + Fixed manufacturing OH RM10 = RM26 Total cost

Calculate Overhead
Over or Under absorbed May-10 Jun-10

Actual Fixed Manuf overhead costs 6000 6000 as per question-Actual spent
Budgeted Fixed Manuf Overhead (OAR RM? X actual
prod units) 5000 3800 Prod units x RM OAR per unit
Difference-(Over)/under absorption of Manuf Overhead 1000 2200
uestion-Actual spent
ts x RM OAR per unit