Case B

You and your team work as management accountants forPeter's Bakery. The following information relates to the year ended 30 June 2021.

Sales	1,900 units
Selling price per cake	$30.00
Direct Materials	$2 per unit
Direct Labour	$4 per unit
Variable overhead	$5 per unit
Fixed manufacturing overhead	$ 10,000
Selling and Administrative costs:
Variable costs	$3 per unit sold
Fixed costs	$ 2,500
Production	2,000 units

REQUIRED:

A) Prepare an income statement for Peter's Bakery for the year ended 30 June 2021 using:

i) Absorption costing (3 Marks)

ii) Variable costing (3 Marks)

B) Reconcile the profit reported (calculated) under the two methods (2 Marks)