Reference no: EM133008339

Sales 1,900 units

Selling price per cake $30.00

Direct Materials $2 per unit

Direct Labour $4 per unit

Variable overhead $5 per unit

Fixed manufacturing overhead $ 10,000

Selling and Administrative costs:

Variable costs $3 per unit sold

Fixed costs $ 2,500

Production 2,000 units

REQUIRED:

Problem A) Prepare an income statement for Peter's Bakery for the year ended 30 June 2021 using:

i) Absorption costing

ii) Variable costing

Problem B) Reconcile the profit reported (calculated) under the two methods