Question 5

KAR Ltd is a manufacturing company which produces and sells a single product. The following information relates to April and May 2022:

	April	May
Sales volume	1,800 units	3,450 units
Production volume	2,250 units	3,000 units
Fixed Production overheads (s)	13,500	13,500

The selling price per unit is 90 and the direct costs (including material sand labour) per unit are 24. The normal level of activity is 2,700 units per month and fixed production overheads are budgeted for 13,500 per month and a predetermined fixed cost per unit is calculated or absorption purposes.

There was no opening inventory at the beginning of April.

Required:

1. Calculate the unit product costs using absorption costing principles.

2. Prepare a statement of profit or loss for April and May using:
   1. Marginal costing principles.
   2. Absorption costing principles