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Shanna's Manufacturing Company produced the following Income Statement for the month ended 31 May 2012. Absorption Costing Income Statement Sales 2 400 000 Less.cost

Shannas Manufacturing Company produced the following Income Statement for the month ended31 May 2012Absorption Costing Inc

Shanna's Manufacturing Company produced the following Income Statement for the month ended 31 May 2012. Absorption Costing Income Statement Sales 2 400 000 Less.cost of goods sold: Variable production costs 600 000 Fixed production costs 1 200 000 Total production costs 1 800 000 Less closing inventory 450 000 1 350 000 1 050 000 Gross profit Less non-production costs: Variable selling expenses 180 000 Fixed administration expenses 200 000 380 000 670 000 Income from operations Additional Information: ) Revenues and .costs: Sales Per unit S80 Variable production Variable selling $15 $6 (1) Units produced 40 000 units (1) Units sold 30 000 units (Iv) There was no opening inventory. (v) Output for the month was the same as budgeted. (a) Prepare a Marginal (Variable) Costing Income Statement for the month of May 2012. (6 marks) Reconcile the difference in income from operations under the two costing approaches. 13 marks (b) Total 9 marks

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