Poynder and Park plan to manufacture a new product for use in the underwater construction industry. This product will be sold for $34.00 per unit. The following are the unit costs of the product:

1. Direct Materials $11.00
2. Direct labour 15 minutes per unit at $8.00 per hour
3. Variable factory overhead Absorbed at $14.00 per direct labour hour.
4. Fixed factory overhead $3 040 for the 6 months ended 30 June 2011. To be absorbed at a rate per unit.
5. Expected production and sales for the 6 months ended 30 June 2011 are:

Production (units) 380

Sales (units) 365

Additional costs will be:

Sales commission per unit sold $1.00 Fixed administrative costs $2 500 per annum

REQUIRED:

1. Prepare a detailed forecast Income Statement (profit and loss account) for the six months ended 30 June 2011, using marginal costing.
2. Prepare a detailed forecast Income Statement (profit and loss account) for the six months ended 30 June 2011, using absorption costing.
3. Prepare a statement to reconcile the profit in A. with the profit in B.