The following information relates to the month of Jan 2005 : Inventory, 1 Jan 11,000 units Production 35,000 units Inventory, 31 Jan 14,000 units Direct material $ 26.00 per unit Direct labour 13.00 per unit Variable manufacturing overhead 6.00 per unit Fixed manufacturing overhead 122,500 per month Variable marketing costs $ 3.00 per unit Fixed marketing and administrative costs 33,000 per month Normal capacity for the company is 35,000 units per month. The product sells for $70.00 per unit.

Required :

(a) Prepare an Income Statement for the month ending 31 Jan 2005 using the variable costing format.

(b) Prepare an Income Statement for the month ending 31 Jan 2005 using the absorption costing format.

(c) Prepare a schedule reconciling the net profit for Jan 2005 under the variable and absorption costing methods.