UBS Ltd began operations on 1 January, and achieved the following results for the year:

Sales

24000 units

Selling Price

$30 per unit

Manufacturing costs:

Direct materials

$8 per unit

Direct labour

$4 per unit

Variable overhead

$6 per unit

Fixed manufacturing overhead

$200,000

Selling and administrative costs:

Variable

$2 per unit sold

Fixed

$20,000

Production

25000 units

Required:

1. Prepare an absorption costing income statement for UBS Ltd.
2. Prepare a variable costing contribution margin statement for UBS Ltd.
3. Reconcile the differences between the profits under the two statements by using the short-cut method