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Question 1 A company commenced business on 1 December making one product only, the cost card of which is as follows: C Direct labour Direct materials 56 Variable product overhead 14 Fixed production overhead 35 Standard production cost 140 The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 252,000 units per annum. The fixed production overhead incurred in December was C105,000 each month. Selling, distribution and administration expenses are: Fixed €70,000 per month Variable 15% of the sales value The selling price per unit is €245 and the number of units produced and sold was: December (units) Production 14,000 Sales 10,500 Required: a. Prepare the absorption costing profit statements for December. b. Prepare the marginal costing profit statements for December. Examiner: Hellena Aryee c. Reconcile profits under both methods d. Define outsourcing and state the advantages and disadvantages 35 (6 marks) (6 marks) (2.5 marks) (3 marks) Page 1 d. Ar th