b
Absorption-costing profit statements
Year 1
Year 2
Sales
1,000 units
Sales
1,200 units
Production 1,400 units Production 1,000 units
Profit (€3 per unit) Cost of goods sold
Opening stock Variable manufacturing costs Fixed manufacturing costsa Cost of goods available for sale
Closing stockb
€0 700 700 1,400 400
€3,000
€400 500 700 1,600 240
€3,600 Cost of goods sold Gross margin Marketing and administrative costs Variable marketing and admin. costs Fixed marketing and admin. costs Marketing and admin. costs Operating profit
1,000 400 1,000 2,000
1,400
€600
1,200 400
1,360 2,240
1,600
€640 a Fixed manufacturing costs Year 1: €700 ÷ 1,400 = €0.50 per unit Year 2: €700 ÷ 1,000 = €0.70 per unit b Unit stockable costs Year 1: €1,400 ÷ 1,400 = €1.00 per unit Year 2: €1,200 ÷ 1,000 = €1.20 per unit
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