The following budgeted profit statement has been prepared using absorption costing principles.

The members of the management team are concerned by the significant change in profitability between the two six-months periods. As a management accountant, you have analysed the data upon which the above budget statement has been produced, with the following results.

. The production overhead cost comprises both a fixed and a variable element. The latter appears to be dependent on the number of units produced. The fixed element of the cost is expected to be incurred at a constant rate throughout the year.

. The selling costs are fixed.

. The distribution cost comprises both fixed and variable elements. The latter appears to be dependent on the number of units sold. The fixed element of the sot is expected to be incurred at a constant rate throughout the year.

. The administration costs are fixed.

Required: 

Present the above budgeted profit statement in marginal costing format.
 

July to December 2017 BWP'000 BWP'000 540 360 Sales Opening inventory January to June 2017 BWP'000 BWP'000 100 160 Production costs: Direct materials 108 36 Direct labour 162 54 Overhead 90 30 460 280 Closing Inventory 160 80 300 200 Gross profit 240 160 Production overhead: (over)/under absorption Selling costs (12) Distribution costs 50 Administration costs 45 80 2848 12 50 40 80 Net profit 163 182 77 (22) Sales units Production units 15,000 18,000 10,000 6,000