Required: Prepare budgeted profit and loss account under a) marginal costing b) absorption costing

[64 marks]

ABC Limited makes only one product, the detailed standard cost of which is as follows: Per unit (RA) Direct materials 40 Direct labour 25 Variable factory overhead 10 Fixed factory overhead 25 Production cost 100 Variable selling cost 15 Fixed selling cost 20 Net profit 15 Selling price 150 The above units for fixed factory overhead and fixed selling overhead are based on a monthly budget of 3000 units produced and sold. 24000 units are in stock at the beginning of month 1 and budgets for the next 2 months are as follows:- Month 2 Production (units) 2800 2600 Sales (units) 3800 Month 1 2200