Q1)For Hypothetical Inc These are the data

Particulars In Rs

Normal Production 2000

Actual Production 2200

Actual Overheads per quarter at normal production 8000

Other expenses per quarter 600

Standard fixed overhead rate per unit 8

Variables Costs per unit 12

Sales Volume (Selling Price is Rs 28)

Prepare an income statement under both absorption costing and variable costing approach and
calculate the profit under both approaches.

Q2)Ailawadi enterprises offers to place a special order with Hypothetical ltd for 1000 units at
Rs 7 per unit. The management of the co is doubtful about accepting the offer because the
current selling price in the home market of its product is Rs 10. The other relevant data is
mentioned as below
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Present Sales Volume (units) 4000
Production Capacity (units) 5000
Variable Cost(per unit) Rs 6
Fixed Overheads (at normal capacity) 10000
Total Cost(Var Cost , Rs 6 + Fixed O/h Rs2) Rs 2

Should the special offer be accepted.

Q3)Discuss the main advantages and disadvantages of using Variable Costing in managerial
decision-making.

Q4) List three salient differences between Variable and Absorption Costing