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(b) Aqua Limited produces frozen food, a dessert. The product is sold in five-litre containers and had the following price and variable cost per unit
(b) Aqua Limited produces frozen food, a dessert. The product is sold in five-litre containers and had the following price and variable cost per unit for the current year that ended on 30 June: Sales price Direct Material Direct Labour Variable overhead RM19.00 6.00 3.00 4.00 Budgeted fixed overhead for the current year was RM400,000, which was equal to actual fixed overhead. Actual production was 200,000 five-litre containers, which was equal to the budgeted level of production, but only 190,000 containers were sold. Aqua Limited incurred the following selling and administrative expenses: Fixed Variable RM70,000 RM2 per container sold Required: (0) Calculate the cost per unit under variable and absorption costing. (5 marks) (ii) Prepare income statements for the current year using: Absorption costing Variable costing (5 marks) (6 marks) (iii) Which costing method variable or absorption costing would you recommend. Explain
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