500 Question Six (20 marks) Galway Plc manufactures and sells a single product. The following budgeted / actual information is provided in relation to the production of this product: Selling price per unit 50.00 Direct materials per unit 8.00 Direct labour per unit 5.00 Variable production overheads per unit 3.00 Details for the months of May and June 2010 are as follows: May June Production of Product A 380 Sales of Product A (units) 300 500 Fixed production overheads are budgeted at 4.000 per month and are absorbed on a unit basis. The normal level of production is budgeted at 400 units per month. Other costs Fixed selling 4,000 per month Fixed Administration 2,000 per month Variable sales commission 5% of sales revenue There was no opening inventory of Product A at the start of May. You are required to prepare an absorption costing profit statement. Treatment of overhead (over/under absorption) should be presented in the profit statement. You must show your calculation on (i) full production cost, (ii) value of inventory and production and, (iii) under/over absorbed fixed production overhead. (End of Questions - Total Marks 100%)