a clothing company has the following data which produces and sold tshirts during 2010. opening…

a clothing company has the following data which produces and sold tshirts during 2010. opening…

a clothing company has the following data which produces and sold tshirts during 2010. opening inventories of 500t-shirts valued at $100,000 including variabls cost of $80 per t-shirt

production cost 500 units (t-Shirts)

Sales at $300 per t-shirt 400 UNITS

Direct material cost $200

Direct labor cost $100

Factory overhead:

variable costs: $100

Fixed costs: $600

selling and distribution overheads:

variable costs $20,000

Fixed costs $30,000

closing inventory is valued at current costs

prepare and income statement under:

a) absorption costing

b)Marginal costing

c) explain the reason for the difference

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