Rizqi Sdn Bhd just started manufacturing and selling a new product in year 2021. The selling price of the product is RM85 per unit. The data below relates to the product for the month of February 2021.

Opening inventory 3,000 units

Sales6,000 units

Production 8,000 units

Cost per unit: RM

Direct materials 16

Direct labour 16

Production overhead cost 20

Variable selling expenses 2

Additional information:

i. The fixed portion of production overhead cost per unit is RM12.

ii. Monthly fixed production overhead and fixed administrative costs is RM96,000 and RM30,000 respectively.

iii.The company currently practices variable costing method to prepare income statements. However, the Cost Accountant of the company suggests changing the method to absorption costing since the approach is recommended for external reporting purposes.

Required:

a. Prepare the income statement for the month of February using the current approach.

b Prepare the income statement for the month of February using the suggested approach

c. Prepare a profit reconciliation statement.

d. Compare and comment on the profit reported by the two approaches.