A company manufactures a single product for which the following data based on a budgeted capacity of 40,000 units per month, are as follows:

Stock, output and sales data

Details	Units
Sales	50,000
Opening stock	10,000
Closing stock	20,000
Production	60,000

Cost Data per unit

Details	$
Direct materials	10
Direct labour	15
Variable Production Overheads	5
Fixed Production o/h	20

Fixed administrative and selling overheads were estimated at $700,000 and $200,000 respectively. During the periods, the company sold one unit of its product for $80.

Required:

As the accountant, you have been asked to:

(a) Show the profit situation using Marginal costing principles (12 Marks).

(b) Show the profit situation using Absorption costing principles (14 Marks).

( c) Reconcile the profit numbers for both techniques used in the question (4 Marks