Kosova company manufactures and sells a product for 20 per Kg. The data for the year 2020 is given below: Sales in kg: 75,000 Opening inventory: 12,000 kgs Production during the year 80,000 kg

Manufacturing costs: Variable cost: 8 per Kg Fixed manufacturing overhead cost: 320,000 per year Variable marketing and administrative expenses - 2 per kg: 150,000 Fixed marketing expenses: 300,000 per year Required:

Prepare an income statement using absorption and variable costing methods. [10 marks]

Explanation of the cause of difference in net operating income under two concepts.