Reference no: EM132596162

A company manufactures and sells a single product. Budgeted costs for a period are:

$ per unit $ for the period

Direct materials 6.20

Direct labour 3.40

Variable production overhead 0.80

Variable administration overhead 0.60

Fixed production overhead 80,000

Fixed administration overhead 45,000

• Budgeted production is 16,000 units. 1,400 units of the product were in finished goods inventory at the beginning of the period, valued at the above budgeted costs for the period.
• During the period 12,000 units of the product were manufactured. 12,000 units were sold at an average price of $24 per unit. Actual costs in the period were as budgeted.

Required:

Question (a) Using marginal costing, profit statement to show the actual results for the period.

Question (b) Without preparing income statement, calculate and explain, the profit for the period if absorption costing is used.