A Company produces a single product.

The following is the budget for the product Budget

i) Selling price Ksh.10

ii) Direct material cost per unit Ksh.3

iii) Direct wages per unit Ksh.2

iv) Variable overhead per unit Ksh.1

v) Fixed production overhead Ksh.10,000 per month

vi) Production volume 5,000 units per months

Actual

i) Production 6,000 units

ii) Sales 4,800 units

iii) Assume that all costs were as budgeted

Required; Prepare a profit statement using:

i) Absorption costing 6mks

ii) Marginal costing 6mks

iii) Prepare a reconciliation statement to reconcile the two reported profit figures under absorption and marginal costing 3mks