Variable and Absorption Costing

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A group of anti-social formed a company producing a product called “Deaf & Ego”. The product has a selling price of RM60 per unit. The information of the product is as below;

	RM
Direct material -      Mute -      Snub -      Selfish	3kg@RM1.20/kg 2kg@RM0.80/kg 1kg@RM4.60/kg
Direct labour -      Skilled -      Semi-skilled	RM5/hour RM3/hour
Direct expenses	RM2/unit
Variable selling and administration overheads	RM3/unit
Fixed production overhead	30,000
Fixed selling and administration overheads	15,000
	Units
Units produced	32,000
Budgeted production units	40,000
Units sold	28,000

The product took 2 hours to produce by the skilled labour and 2.5 hours by the semi-skilled labour. The marketing department had spent RM25,000 to promote the product but the staff wouldn’t care less about the product.

Required:

1.      Prepare the income statement under the variable costing and absorption costing system for the four periods ending December 2018.
2.      What is the Break-even point in units for the above product.