IM8.10 Intermediate: Marginal costing and absorption costing profit computations and calculation of break-even point for a given sales mix. A company has two products with the following! unit costs for a period: Product A (/unit) Product B (/unit) Direct materials Direct labour Variable production overheads Fixed production overheads Variable other overheads Fixed other overheads 1.20 1.40 0.70 1.10 0.15 0.50 2.03 1.50 0.80 1.10 0.20 0.50 Production and sales of the two products for the period were: Product A (000 units) Product B (000 units) Production Sales 250 225 100 110 Production was at normal levels. Unit costs in opening stock were the same as those for the period listed above. Required: (a) State whether, and why, absorption or marginal costing would show a higher company profit for the period, and calculate the difference in profit depending on which method is used. (4 marks) (b) Calculate the break-even sales revenue for the period (to the nearest 000) based on the above mix of sales. The selling prices of products A and B were 5.70 and 6.90 per unit, respectively. (7 marks) ACCA Foundation Stage Paper 3