Question 3 Vale Manufacturing started business on 1 April 2003,


Question Description:

24.99

Question 3 Vale Manufacturing started business on 1 April 2003, and incurred the following costs during its first three years. Year ending 31 March2004 2005 2006 Direct materials 60,000 49,900 52,200 Direct labour 48,000 44,000 45,000 Variable overheads 24,000 30,000 40,000 Fixed costs 40,000 40,600 41,300 Sales during the first three years were all at $20 per unit Production each year (units) 16,000 14,000 14,000 Sales each year (units) 14,000 14,000 15,000 Required: Prepare a statement showing the gross profit for each of the three years if the company used: The marginal costing approach to valuing inventory; The absorption costing approach to valuing inventory. Advise the company of the advantage and disadvantages of using each method.

Answer

24.99