Bolte Manufacturing operations for 2017 are as follows:

$

Per unit:

Sales price50

Direct material cost 18

Direct wages4

Variable production overhead3

Per month:

Fixed production overhead99 000

Fixed selling expenses14 000

Fixed administration expenses26 000

Variable selling expenses is 10% of sales value.

Normal capacity was 11 000 units per month.

JanuaryFebruary

UnitsUnits

Sales10 00012 000

Production12 00010 000

Using the two methods:

A.Compute the unit production cost(4 marks)

B.Determine the value of the closing inventory(7 marks)

C.Prepare the Marginal Income Statement and the Absorption Income Statement for March and April(22 marks)

D.Reconcile the net profits for March and April(3 marks)

E.Comment on the differences of the two systems with respect to:

i.Stock valuations(2 marks)

ii.Period profits(2 marks)