Reference no: EM132596633

Biotech Ltd produces memory discs at its factory. The following information relates to the production of memory discs for the period ending 31 March 2020.

Production Sales

(Units) (Units)

Budget 90,000 87,000

Actual 96,000 93,000

                   Variable Prod.            Fixed Prod.             Fixed Selling

                        Cost                         Overhead                  Overhead

                           $                                   $                               $

Budget           4,500,000             900,000               675,000

Actual              4,800,000                 937,500                 675,000

The fixed production overhead was absorbed at a pre-determined rate per unit produced. One memory disc was sold for $130. At the beginning of April 2019, there was opening inventory of 5,250 units valued at $315,000; this includes fixed production overhead of $52,500.

Required:

Question a. How to work out a marginal costing income statement for the company.

Question b. How to work an absorption costing income statement for the company.

Question c. How to reconcile the income under both statements