Your organisation produces/sells a single product. Details on the product are given below.

Selling price 35

Unit costs

Direct materials 6

Direct Labour 5

Variable Production overhead 2

Variable sales overhead 1

Budgeted production for the period 600 units

Fixed costs for the month are given below

Budgeted cost Actual cost

Production overhead 1,800 2,000

Administration cost 800 700

Selling cost 400 600

Budgeted sales for the period were 450 units but the actual sales were 600 units. There was no opening stock and actual production for the month was 700 units

Calculate costs using appropriate techniques of cost analysis to prepare an income statement of marginal and absorption costing using the data provided below and explain the differences between them.