Solo Limited makes and sells a single product . The following data relate to periods1 to 4

sh.

Variable cost per unit 30 Selling price per unit 55 Fixed costs per period 6,000 

Normal activity is 500 units and production and sales for the four periods are as follows :

Period 1 units Period 2 units Period3 units Period 4 units

Sales 500 400 550 450 Production 500 500 450 500 

There were no opening stocks at the start ofperiod 1

Required

a) Prepare operating statements for each of the periods 1 to 4 , based on marginal costing principles. (5 marks)

b) Prepare operating statements for each of the periods 1 to 4 , based on absorption costing principles. (5 marks)

c) Comment briefly on the results obtained in each period and in total by the two systems. (5 marks)