QUESTION 5

Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:

Fixed cost:
Fixed Manufacturing overhead	Rs 40,000
Fixed Selling & Administrative	Rs 60,000
Selling Price per unit	Rs 100
Variable cost per unit:
Direct Materials	Rs 30
Direct labor	Rs 10
Variable Manufacturing overhead	Rs 5
Variable Selling & Administrative	Rs 2
Units In beginning Inventory	0
Units Produced	2000
Units sold	1900

Required: a. Compute the unit product cost under both absorption and variable costing.(2 Marks) b. Prepare an income statement for the year using absorption costing.( 3 Marks) c. Prepare a contribution format income statement for the year using variable costing.(3 Marks)

d. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year. (2 Marks)