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Question 1 Kamelwa Limited manufactures and sells a single product coded Kams. The following data relate to the four quarters in the last financial...
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Question 1 <br/>Kamelwa Limited manufactures and sells a single product

coded Kams. The following data relate to the four quarters in the last financial year.


K
Selling price per unit 110
Variable cost per unit 60
Fixed cost per quarter 12000


Normal activity is 500 units and production and sales for the four quarters are as follows:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
units units units units
Sales 500 400 550 450
Production 500 500 450 500


There were no opening inventory at the start of quarter 1.


Required
(i) profit statements for each of the quarters 1 to 4, based on absorption costing principles.
(ii) profit statements for each of the quarters 1 to 4, based on marginal costing principles.
(iii) Comment briefly on the results obtained in each period and in total by the two systems.




Question 2
Mweru Watipa Ltd has the following production data for the next one month. The figure relate to the full capacity level. Planned output is equal to the maximum demand per product.


Product W X Y Z
K K K K
Selling price 320 428 200 280
Raw material cost 48 112 44 80
Direct labour cost 132 176 66 44
Variable overhead cost 48 36 48 36
Fixed over head cost 32 20 16 24
60 84 26 96
Direct labour hours per unit 6 8 3 2


There will be a short supply of direct labour force due to a temporal planned lock down for two weeks out of the coming four weeks. This means that only 2160 hours will be available for production rather than the usual 4320 hours.


1) If the temporal lock down measures go ahead, which products or products should be produced if profits are to be maximized.

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