Basic standard cost data of Zahoor & Co. is as under:

Normal Capacity (monthly) 50,000 units

Production, October, 2007 45,000 units

Sales October, 2007 47,500 units

Standard variable costs per unit: Rupee(s)

Material and labour 8.00

Factory overhead 2.00

Distribution expenses 1.00

Operating variances:

Representing excessive incurrence of variable costs Rs.4,500

Selling price per unit Rs.20

Fixed cost for October, 2007:

Manufacturing expenses (Rs.4/- per unit on normal capacity) Rs.200,000

Distribution expenses 75,000

Administration expenses 50,000

Others 25,000

Required:

1. Prepare income statement for the month of October, 2007 under:
2. Absorption Costing, and
3. Marginal Costing

Prepare a reconciliation of incomes under absorption costing and marginal costing for October, 2007.