NormanCompanyproduces and sells fibre.The company has no beginning inventory, it produced 50,000 units and sold 56,000 units during the period.Net operating income under absorption costing is four million dollars. Fixed manufacturing overhead incurred for the above production process was$310,000.

Required:

(a) Compute the units which make the differencein the two systems(variable costing andabsorption costing).(1 mark)

(b)Computethe manufacturing overhead cost per unitwhich makesthe differencein the twosystems. (1 mark)

(c) Use vertical 1 column and 3 rows schedule tocomputethe variances between the variable costing and absorption costingnet operating income figures.(4marks)