Jules Company manufactures and sells two products GK320 and GK340. It had budgeted to produce 25,000 units each for both GK320 and GK340. The following costs were incurred during 2020, the companys first year of operations.

Variable Cost per unit

Details	GK320 $	GK340 $
Direct materials	18	13
Direct labour	5	7
Variable overheads	2	7
Fixed production overhead	200,000	200,000

Fixed selling and administrative overheads for the company was $65,000.

During 2020, the company produced 20,000 units for GK320 and 15,000 units for GK340. The company sold 16,000 units for GK320 and 10,000 units for GK340. The selling price of the companys product is $50 per unit for both products.

Required for both products:

a) Compute the ending inventory for the year. [3 marks]

b) Assume the company uses the absorption costing method:

i. Compute the total cost to produce one unit of each product. [5 marks]

ii. Prepare an income statement for 2020. [14 marks]

c) Assume that the company uses the variable costing method:

i. Compute the variable cost of producing one unit of each product.[4 marks]

ii. Prepare an income statement for 2020. [12 marks]

d) Reconcile the difference between the profits of the two methods. [6 marks]