Premium	Budget
Production (units)	45,000	75,000
Sales (units)	40,000	74,000
Operating inventory (units)	0	0
Financial Data:
Unit selling price	500	250
Unit cost:
Direct material	200	100
Direct Labour	100	50
Variable production overheads	100	50
Fixed production overheads	25	25
Variable selling overheads	50	50

The actual fixed production overheads for the same period were 95,000 and fixed administration overheads were 15,000.

Task 1

1. explain an income statement based on marginal costing principles. (20 marks)
2. explain an income statement based on absorption costing principles. (20 marks)