Ivy, SA, Produces a Single Product That Sells for £60 Per

Essay

Ivy, SA., produces a single product that sells for £60 per unit. There were no inventories of work in process or finished goods. Costs for the year were as follows: $\begin{array}{ll}\text { Variable costs: } & \\\text { Direct materials } & £ 8 \text { per unit } \\\text { Direct labour } & £ 12 \text { per unit } \\\text { Manufacturing overhead } & £ 5 \text { per unit } \\\text { Selling expenses } & £ 3 \text { per unit }\end{array}$
Fixed costs:
Manufacturing overhead $\quad$$\quad$$£ 36,000$ per month
Selling and admini strative $\quad$$\quad$$£ 15,000$ per month During the first three months of the year, production and sales in units were as follows: $\begin{array}{llr}&\text { Production } & \text { Sales } \\\text { January } & 4,000 & 4,000 \\\text { February } & 4,000 & 3,500 \\\text { March } & {4,000}&4,500 \\\text { Total } &4,000&{4,500}\\\end{array}$ The company uses an actual cost system. There were no work-in-process inventories at the end of any month, and the company uses FIFO costing.
a.Determine the unit cost of production under variable costing for each of the three months.
b.Determine the unit cost of production under absorption costing for each of the three months.
c.Determine income under variable costing for each of the three months.
d.Determine income under absorption costing for each of the three months.