Beryls commenced business on 1 Jan 2019 making a single product, Chocolate Coated Almonds. Unit cost information is as follows:

	$
Variable materials	8
Variable labour	5
Variable overhead	2
Variable production cost	15

Budgeted normal output is 3,000 units per month and budgeted fixed production overheads are $15,000 per month.

Production and sales were as follows:

May June

units units

Production 2,000 3,200

Sales 1,600 3,000

The selling price per unit is $35. Selling and distribution costs are:

Variable - 15% of selling price

Fixed - $10,000 per month

Required to:

1. Prepare profit and loss statements, clearly showing inventory values, for each month period using:
   1. marginal costing
   2. absorption costing.

(16 marks)

2. Reconcile the marginal and absorption profit and loss statements produced in part (a).

(4 marks)

3. Outline the advantages of marginal costing over absorption costing.

(5 marks)