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QUESTION 3 A company has the following budgeted data for its first year of operation: £ Per unit Direct materials 1.30 Direct labour 1.50 Variable overhead 0.20 Fixed overhead 1.00 (£150,000 / 150,000 units of normal volume) Total standard factory cost 4.00 Selling price 5.00 Other expenses: Fixed selling and administration overhead £65,000 Sales commission 5% of sales value Production and sales in units Opening stock Nil Production 170,000 Sales 140,000 REQUIRED Prepare a budgeted profit statement for the first year of operation using: i. absorption costing principles (10 marks) ii. marginal costing principles (10 marks) (Total 20 marks)
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