1. Fixed Indirect Manufacturing Costs are $40,000 per year. 2. Direct Labour Costs per gallon of bay oil over each of the last two years are $6 per gallon. 3. Direct Material Costs per gallon of bay oil over each of the last two years are $10 per gallon. 4. Direct Variable Expenses per gallon of bay oil over each of the last two years are $8 per gallon. 5. Production Year 1: 42,000 gallons Year 2: 56,000 gallons 6. Sales Year 1: 36,000 gallons Year 2: 48,000 gallons 7. Selling Price: $50 per gallon each year 1. Prepare Statements for Year 1 and Year 2 comparing the Marginal and Absorption Costing Approaches. (25 marks) 2. What are the major differences between the Marginal and Absorption Costing Approaches? (5 marks)

1. Fixed Indirect Manufacturing Costs are $40,000 per year. 2. Direct Labour Costs per gallon of bay oil over each of the last two years are $6 per gallon. 3. Direct Material Costs per gallon of bay oil over each of the last two years are $10 per gallon. 4. Direct Variable Expenses per gallon of bay oil over each of the last two years are $8 per gallon. 5. Production Year 1: 42,000 gallons Year 2: 56,000 gallons 6. Sales Year 1: 36,000 gallons Year 2: 48,000 gallons 7. Selling Price: $50 per gallon each year 1. Prepare Statements for Year 1 and Year 2 comparing the Marginal and Absorption Costing Approaches. (25 marks) 2. What are the major differences between the Marginal and Absorption Costing Approaches