Crystal Ltd makes and sells two products, Omega and Sigma. The following information is available for period 3:

Omega Sigma

Production (units) 6,000 7,500

Sales (units) 5,500 5,800

Opening Stock (units) 1,000 1,500

Budgeted capacity (units) 4,000 3,000

Financial Data Omega Sigma

$ $

Unit selling price 800 850

Unit Cost:

Direct Materials 300 150

Direct labour 50 200

Variable production overheads 100 200

450 550

Fixed production overheads 60 10

Fixed administration overheads were $980,000 and Fixed selling overheads were $720,000.

As the Cost Accountant you have been asked to do the following:

a.Show the income statement based on marginal costing principles.

b.Show the income statement based on absorption costing principles.

c.Reconcile profit statements for both techniques.

d. Management is planning on launching a marketing campaign to increase the sales of the product that is more profitable.

What product should management focus on increasing sales for.