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08 Activity 2 Costing Bacayo PDF

LeaveLand Group produced 8,000 units and sold 3,000 units. Their cost structure included direct materials, direct wages, variable overhead, and fixed overhead per unit. Using marginal costing, their contribution margin was P225,000 and gross profit was P195,000. Using absorption costing, their gross profit was also P195,000.

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220 views2 pages

08 Activity 2 Costing Bacayo PDF

LeaveLand Group produced 8,000 units and sold 3,000 units. Their cost structure included direct materials, direct wages, variable overhead, and fixed overhead per unit. Using marginal costing, their contribution margin was P225,000 and gross profit was P195,000. Using absorption costing, their gross profit was also P195,000.

Uploaded by

David Gutierrez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

BM2209

Names of student: Daryll John O. Bacayo Section: BSBA 301 Date: 112/2/22

ACTIVITY
LeaveLand Group desires to determine the gross margin associated with their production using marginal and
absorption costing. The operating statistics of the company were as follows:
Total units produced 8,000 units
Total units sold 3,000 units
Selling price per unit P100
Total fixed overheads P30,000
The following are the cost structure per unit of output produced:
Direct Materials P5
Direct Wages 5
Variable Overhead 5
Fixed Overhead 6

Requirements: (8 items x 10 points)


A. Closing stock
B. Marginal cost
C. The total cost of production
D. Amount of sales value
E. Opening and closing stock using marginal costing
F. Opening and closing stock using absorption costing
G. Contribution margin and gross profit using marginal costing
H. Gross profit using absorption costing

Answers:
A. Closing stock

Closing stock = Units produced – Units sold


= 8,000 units – 3,000 units
= 5,000 units

B. Marginal Cost

Marginal cost of production = Direct Materials + Direct wages + Variable Overhead


= 5+5+5
= P15

C. The Total Cost of production

Total production cost = Direct Materials + Direct Wages + Variable Overhead + Fixed Overhead
= 5+5+5+6
= 21
D. Amount Sales of value

Amount of sales value = Units sold x Selling price per unit


= 3,000 x 100
= 300,000

E. Opening and closing stock using marginal costing

Opening stock = Units produced x Marginal cost of production


= 8,000 x 15
= 120,000

Closing stock = Units sold x Marginal cost of production


= 3,000 x 15
= 45,000

F. Opening and closing stock using absorption costing

Opening stock = Units produced x Total cost of production


= 8,000 x 21
= 168,000

Closing stock = Units sold x Total cost of production


= 3,000 x 21
= 63,000

G. Contribution margin and gross profit using marginal costing

Contribution margin = Amount sales value – (Opening stock – Closing stock)


= 300,000 – (120,000 – 45,000)
= 300,000 – 75,000
= 225,000

Gross profit = Contribution margin – Fixed overhead


= 225,000 – 30,000
= 195,000

H. Gross profit using absorption costing


= Amount of sales value – (Opening stock – Closing stock)
= P300,000 – (168,000 – 63,000)
= 300,000 – 105,000
= 195,000

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