Jan Limited produces and sells one product. Details related to the performance of the company in the year to December, 2017 is as follows:

Opening stock 3,000 units

Budgeted production units 20,000 units

Budgeted Fixed production costs K 92,000 per year

Budgeted Fixed Distribution costs K20, 000 per year

Selling price per unit K 14

Variable production costs per unit K 4.40

Variable Distribution cost per unit K1.00

Actual production units 21,000 units

Actual sales units 22,000 units

Required:

1. Prepare profit statements for the year 2017 using:

1. Absorption costing principles.

(9 marks)

2. Marginal costing principles.

(6 marks)

2. Reconcile the reported profits reported under the two principles in (a) above.

(5 marks)