Jennson ltd manufactures one product only. the car model T6, the standard cost of which the following

Direct Material 16 ,Direct Labour 8 ,Variable Production Overhead 8 ,Fixed Production Overhead 10 , Total cost = 42

The fixed production overhead figure per unit has been based on a budgeted normal output of 30,000 units per annum It is expected that fixed overheads are incurred evenly over the year The actual fixed production overheads for July were 34,000. Selling, distribution and administration expenses are:

Variable 10% of the sales value - Fixed 240,000 per annum

The selling price is 70 per unit and in July the number of units produced and sold were

Units Production 3.000

Sales 2.400

There were no opening stocks in July.

You are required to: (a) Prepare profit statements for July using: Variable (marginal) costing and Absorption costing

(b) Present a reconciliation of the profit figures in your answer to (a) and explain the reasons for any differences between the two profit statements