required part (e) i have also uploaded my answers of parts a,b,c, and d in case you need some information. would you please let me know if there is any mistakes as well. thanks a lot.

QUESTION 1 Cute Baby Lid manufactures and sells a single model of baby mattress. Relevant data for the product are given below: Direct materials S7 per unit Direct labour $10 per unit $5 per unit Variable manufacturing overhead Variable selling and administrative cost $3 per unit Fixed manufacturing overhead $315,000 Fixed selling and administrative cost $245,000 Selling price $60 per unit Inventory data for January and February 2019, the first two months of operations are given below: Particulars Opening stock Production Closing stock January 2013 0 17,500 2,500 February 2019 2,500 17,500 Required: (a) Determine the product cost per unit under absorption costing and marginal costing. Under absorption costing Direct materials costs $7 per unit Direct labour costs $10 per unit Variable manufacturing overhead $5 per unit Fixed manufacturing overhead $18 per unit ($315,000/17,500) Product cost per unit $40 Under marginal costing Direct materials costs $7 per unit Direct labour costs $10 per unit Variable manufacturing overhead $5 per unit Product cost per unit $22 per unit (b) Prepare income statements for January and February 2019 using marginal costing. January 2013 February 2019 $900,000 $1,200,000 Sales Revenue Variable Cost of Goods Sold Beginning Inventory (+) Variable Manufacturing Costs Available for Sale $0 $55,000 $385.000 $385,000 $385.000 $440,000 (-) Ending Inventory ($55,000) ($0) Variable Cost of Goods Sold ($330,000) ($440,000) Variable Selling and Administrative Cost ($45,000) Contribution Margin $525,000 ($315,000) ($60,000) $700,000 ($315,000) Fixed Manufacturing Costs ($245,000) Fixed Selling and Administrative Cost OPERATING PROFIT ($245,000) $140,000 ($35,000) (c) Prepare income statements for January and February 2019 using absorption costing January 2019 February 2019 Revenues $900,000 $1,200,000 Cost of Goods Sold Beginning Inventory $100,000 (+) Variable Manufacturing Costs $700,000 $700,000 Cost of goods available for sale $700,000 $800,000 (-) Ending Inventory $100,000 Cost of Goods Sold $600,000 $800,000 Gross Margin $300,000 $400,000 Operating costs: Variable Selling and Administrative costs (545,000) ($60,000) Fixed Selling and Administrative Cost ($245,000) ($245,000) OPERATING PROFIT $10,000 $95,000 (d) Prepare a statement for reconciling variable costing and absorption costing profit numbers. Absorption costing operating income - variable costing operating income fixed manufacturing costs in ending inventory - fixed manufacturing costs in beginning inventory January 2019: A$10 000 - (-A$35 000) = (A$18 * 2500) - (ASO) A$45 000 A$45 000 = February 2019: A$95 000 - A$140 000 -A$45 000 = = (A$0) - (A$18 * 2500) A$45 000 (o) The Cute Baby's accounting department has determined that by selling 16.000 units month, the company will achieve breakeven (zero profit situation). The managing director looked at the absorption costing income statement and said "I am confused. The accounting people say that we will breakeven at 16,000 units per month, but we sold only 15,000 units in January 2019 and the absorption costing income statement shows an operating profit number greater than zero. He said that the absorption costing incomes statement must be wrong". Prepare a brief note to the managing director explaining why the operating profit under absorption costing is greater than zero in January 2019. (2 + 8 + 5 + 3 + 2 = 20 marks)