Answer Happy

(a) In each of the following three sets of hypothetical
circumstances, calculate Kampuyu’s profit in each of the three
years 2017, 2018 and 2019, and also in total over the three year
period 2017 to 2019, using first a marginal costing system and then
a full-cost absorption costing system with fixed cost recovery
based on a normal production level of 1,000 units per annum: (i)
Stable unit levels of production, sales and inventory 2017 2018
2019 _____________________________________________________ Opening
stock 100 100 100 Production 1,000 1,000 1,000 Sales 1,000 1,000
1,000 Closing stock 100 100 100 (4 marks) (ii) Stable unit level of
sales, but fluctuating unit levels of production and inventory 2017
2018 2019 _____________________________________________________
Opening stock 100 600 400 Production 1,500 800 700 Sales 1,000
1,000 1,000 Closing stock 600 400 100 (4 marks) (iii) Stable unit
level of production, but fluctuating unit levels of sales and
inventory 2017 2018 2019
_____________________________________________________ 3 Opening
stock 100 600 400 Production 1,000 1,000 1,000 Sales 500 1,200
1,300 Closing stock 600 400 100 (4 marks)