EXERCISE . A company that manufactures one product has calculated its cost for the coming year on a production volume of 10,000 units. The selling price is GH$5 per unit. Sales for the year is estimated at 9,000 units. . The level of inventory at the beginning of the year is 1,000 units and the company will not maintain its inventory of finished products at the same level at the end of the year. Based on the production volume, the cost per unit is as follows: Cost per unit GHC Prime Cost 3.50 . Manufacturing overheads 0.75 Selling and Administration overheads 0.30 . Total 4.55 2021-11-20 33 Exercise (Cont'd.) . Fixed manufacturing overheads, which have been taken into account in calculating the above figures, was GH$5,000 per annum. . Selling and administration overhead is treated as fixed, and is charged against sales in the period in which it was incurred. . You are required to present income statements showing the profit using: a. Absorption costing and b. Variable costing. c. Reconcile the profits obtained. 2021-11-20 34