Lanark Enterprises began operations on I January 1982. The accounting records for the first two years of operations revealed the following:

Sales revenues Variable manufacturing costs Fixed manufacturing costs Selling and administrative expenses Opening stock Units produced Units sold 1982

£54000

£30000

£20000

£16000 o

10000 9000 1983

£48000

£27 000

£20000

£25000 1000 10000 8000 There were no semi-complete units in closing stocks at the end of either year.

Prepare separate income statements for 1982 and 1983 under each of the following basis of stock valuation:

(a) Absorption, or full-cost, basis ;

(b) Marginal, or variable, cost basis.