) 82 Pearl company Ltd. Has been operating some years, utilizing overheads variable technique to reflect the charging of overheads into production cost. Management has recently received a report, however, from a member of staff who attended a short course on accounting technique. This report highlighted another technique for dealing with the treatment of fixed portion of manufacturing overheads-the absorption approach. Management is impressed by the report and has decided, a special exercise the account of financial year just ended should be shown under both technique and have already asked you, the company`s accountant to undertake this task.

The following information is relevant to the year ended 30th June 2022. Production unit 65,000 Sales (units) 50,000 Selling price GHS 300 Direct Labour 8,775,000 Direct material 7,800,000 Variable manufacturing cost 52,000 Depreciation 97,500 Royalties 91,000 Administration overhead 780,000 Office rent 13,000 Variable Selling Overhead 39,00

) 84 You are required to, i. Calculate the cost per unit Absorption and marginal costing ii. Prepare a profit and loss account for the year ended 30th June,2022, using the variable approach iii. Prepare a profit and loss account for the year ended 30th June, 2022, using the fixed overhead absorption approach as employed by the company. iv. Prepare a reconciliation for the two income statement. v. State two limitation of marginal costing system.