Q No$.6.$ A company produces a single product that is sold for Rs$\mathrm{.}25$ per unit. The followings are the standard figures:

Direct material cost.................................. Rs$\mathrm{.}5$ per unit

Direct labor cost $.....................................$ Rs$\mathrm{.}4$ per unit

Variable FOH $........................................$ Rs$\mathrm{.}3$ per unit

Fixed FOH $............................................$ Rs$\mathrm{.}12,000$ per month

Variable Selling expenses $..........................$ Rs$\mathrm{.}3$ per unit sold

Fixed selling expenses $..............................$ Rs$\mathrm{.}3000$ per month

Fixed Administrative expenses.................... Rs$\mathrm{.}5000$ per month

Budgeted Production$/$Normal capacity $5000$ units per month.

There were $300$ units of finished goods at the beginning of the month. Actual results for the month of November and December $2015$ showed the following level of production and sales.

Production Sales

November $20154800$ unit $4700$ units

December $20155500$ unit $5700$ units

Required:

$1)$ You are required to prepare operating statement for each of the month of November and December using Absorption Costing and Marginal Costing techniques.

$2)$ Prepare a statement of profit reconciliation.

$3)$ What is the mandatory rule for the use of Absorption Costing and Marginal Costing?