You are required to prepare statements showing the valuation of stock and the profit figures for Year 1 and Year 2 using: (a) Absorption costing (b) Variable costing.

PLK plc sets up as a manufacturing business in Dundee. The selling price of its single product is $30 per unit. Direct material costs are so per unit and the direct labour costs are $10 per unit. Annual fixed costs are $80,000 for a normal production level of 20.000 units. The following information relates to production and sales for Year 1 and Year 2. Production (units) Sales (units) Year 1 19,000 18,000 Year 2 20.500 19.500