Queensland Processor Limited makes and sells one product. The standard production cost per unit is as follows:

N$

Direct Labour 3 hours @ N$ 6 per hour = 18

Direct Material 4 kg @ N$ 7 per kg = 28

Production overhead Variable =3

Production overhead Fixed =20

Standard Production cos =69

Normal output is 16 000 units per annum and this figure is used for the fixed production overhead

calculation.

Cost relating to selling, distribution and administration are:

Variable is 20% of sales value

Fixed is N$ 180 000 per annum

The only variance is a fixed production overhead volume variance. There are no units in finished goods

stock at 1 October 2017. The fixed overhead expenditure is spread evenly throughout the year.

The selling price per unit is N$ 140.00

The number of units to be produced and sold for the two six monthly period detailed bellow is budgeted

as follows;

Six months ending 31 March 2017 Six months ending 30 September 2017

Production 8 500 7 000

Sales 7 000 8 000

1.1 Prepare the statements of comprehensive income for the two six monthly periods as per,

(a) Variable costing method

(b) Absorption costing method

(c) Reconcile the profit between the two methods