Rio Ltd makes and sells two products, Sham and Wham. The following information is available for period 3:

	Sham	Wham
Production (units)	7,500	5,400
Sales (units)	7,000	3,600
Opening stock (units)	480	300
Budgeted capacity (units)	8000	5000
Financial Data:
	$	$
Unit selling price	115	110
Unit cost:
Direct materials	25	10
Direct labour	35	10
Variable production overheads	15	5
	75	25
Fixed production overheads	30	20

Fixed administration overheads were $340,000 and Fixed selling overheads were $40,000.

As the Accountant you have been asked to do the following:

a. Determine the amount of stock in store at the end of period 3.

b. Calculate the full cost per unit of production.

c. Prepare an income statement based on marginal costing principles.

d. Prepare an income statement based on absorption costing principles.

e. Management is planning on launching a marketing campaign to increase the sale of Sham. They believe that the higher selling price of Sham means that it will generate more revenue and profit than Wham. Advise management on the product they should focus on increasing sales for by preparing a reconciliation of the profits.