The seller of magnetic chip cards provided the following information for the period ending 31 December 2021.

	Production (Units)	Sales (Units)
Budgeted	180,000	174,000
Actual	192,000	186,000

	Budgeted	Actual
Fixed production cost	$1,800,000	$1,875,000
Fixed selling overhead	$1,350,000	$1,350,000

The fixed production overhead was absorbed at a pre-determined rate per unit produced. One supplement was sold for $520. At the beginning of January 2021, there was opening inventory of 10,500 units valued at $630,000; this includes fixed production overhead of $105,000.

**Hint enough information is provided to calculate the variable cost per unit.

Required:

(a) Prepare a marginal costing income statement for the company. (4 marks)

(b) Prepare an absorption costing income statement for the company. (11 marks)

(c) Reconcile the income under both statements. (2 marks)

(d) Distinguish between variable costing and absorption costing. (3 marks)