Question ii) Huzaifas Company produces and sells a single product - cricket bat. Selected costs and operating data relating to the product are given below for the year ended 2017.

Opening Inventory 5,000 units, selling price $45, total sales 40,000 units.

Variable costs per unit: DM $7, DL $5, MOH $3, selling and admin expense is 40% of Direct labor.

Fixed MOH $5 per unit. Total fixed selling and admin expense ratio is 0.875:1 to total fixed manufacturing overhead.

The companys total production is seven times to its opening inventory.

Required:

ii1.. Compute the unit product cost for Variable Costing and Absorption Costing. [2 Marks}

ii2. Prepare Variable and Absorption Costing income statement for year ended 2017. [8 Marks]

ii3. Explain briefly why net operating income differs between variable and absorption costing. [2 Marks].