Produce a Financial Report that accurately applies and interprets data for a range of business activities carried out at RYANAIR.

Produce a Financial Report that accurately applies and interprets data for a range of business activities carried out at RYANAIR..

Scenario: RYANAIR, being a low cost ‘No Frills” airlines cannot find it feasible to offer free meals on board . Passengers on board desirous of food need to buy it. Keeping in view the demands of its customers, RYANAIR has recently introduced “ RYAN ECONOMEAL ” sale on board on all its popular destination flights , which is a continental snacks pack with the choice of one soft drink. The trial sale of this economy meal pack is proposed to be made in the first instancon London Spain route which commands heavy traffic.

The production of this refreshment pack has been taken up in collaboration with a company named Cordell Company. RYANAIR executives want to know what are the profits under Absorption Costing and Marginal Costing . Your line manager has provided you with the client’s data for 6 months and wants you to prepare income statement under both Absoprtion Costing and Marginal Costing. Subsequent to that the data is to be interpreted and explained.

The following information is available for the months January to June for the “ RYAN ECONOMEAL ” package .

	£
Unit Selling Price	10
Unit Variable Cost	6
Fixed Cost per period	300000

RYANAIR produces only one product and the budgeted activity is expected to average 150,000 per month .

2017	Jan	Feb	Mar	Apr	May	Jun
Units sold ( 000s)	150	120	180	150	140	160
Units produced (000s)	150	150	150	150	170	140

1)
No opening inventories at the start of the period 1

2)
Actual manufacturing fixed overheas incurred £ 300000 per period

3)
We shall assume that non manufacturing fixed overheads are £100,000 per period

Calculate costs per unit under both absorption costing and marginal costing and explain why do they differ. Explain how they are used to prepare an Income Statement under Marginal Costing and Absorption Costing

Accurately apply the results obtained in P3 above to produce an Income Statement using

1.
Variable Costing Statements

Marginal CostingStatements .

Produce a Financial Report that accurately applies and interprets data for a range of business activities carried out at RYANAIR.

Produce a Financial Report that accurately applies and interprets data for a range of business activities carried out at RYANAIR.