Tata Motors is looking forward to manufacture wheels accessory as a new product under Tata Motors brand name.

The product will get produced in two departments (machining and finishing) before being packed into boxes in the dispatch department.

The company has provided the following budgeted information.

Direct material$50 per unit

Direct labour Machining department (per 100 units) at $5.00 per hour4 hours

Finishing department (per 20 units) at $6.00 per hour3 hours

Dispatch department labour (per 20 units packed) at $5.00 per hour1 hour

Packing boxes$1 each

Fixed overheads:

Machining departmentAbsorbed at a rate of $6 per machine hour

Finishing departmentAbsorbed at a rate of $4 per direct labour hour

Dispatch departmentAbsorbed at a rate of $1 per unit packed

The selling price is $200 per unit.

Planned production and sales for the next period are as follows.

Production3,000 units

Sales2,500 units

There is no stock of packed or unpacked products, direct material or packing boxes at the beginning of the period. At the end of the period it is expected to have no stock of packing boxes and 400 units unpacked in the dispatch department. All other production in the period will be packed.

Required (a) Calculate the number of units completed and packed in the period.

(b) Produce Income statement using

(i) absorption costing

(ii) marginal costing.

(c) Reconcile 2 accounting methods

(d) Suggest the company if they should go ahead with this product.