Assignment Task:

The Purpose and Context
This assignment will help you develop your understanding of the managerial accounting processes and you will learn how different accounting methods create different pictures for a company given the same data.

Case Scenario
Swipes 50 Limited manufactures a specialized screen protector for laptop computers. The Plus Swipe is a screen protector that prevents scratched on laptop screens. The company has been in operation for three years and now that the company has refined its production process, the directors have decided to focus on product costing. She wants to look into  how  both  absorption  and  variable costing  affect  the profits of the company.
Additional Information

  1. Swipes 50 Ltd. production capacity is 20,000 units per month.
  2. Fixed production overheads are €28,600 per month.
  3. Swipe 50 sell Plus Swipes at €22 each.
  4. On 31st January, the company’s warehouse had no Plus Swipes in inventory.
  5. Fixed and variable elements (a variable portion is incurred based on units sold) are included in the total administration expenses.

Assignment Instructions

1. Prepare a profit statement for Swipe 50 Limited for the months of February and March using: 

a) Absorption costing

b) Variable costing

2. Reconcile the profit calculated using absorption costing to that using variable costing. 

3. Explain how each method differs from the other method and also explain the importance of the methods.

4. Explain three ways Swipes 50 Ltd. can improve its accounting systems. 

5. State why managing accounting jobs are important in a manufacturing company.

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  • Uploaded By : Mia
  • Posted on : March 17th, 2019

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