Absorption and Marginal Costing - Unit cost and Income Statement

Assalamualaikum,

In order for you to have more understanding regarding the topic, let's do some simple exercise.

Ainnazuha Scarf presents the following data for year 2019;

·        Opening inventory: 0 Units

·        Sales: 8,000 Units @ RM950

·        Production: 10,000 Units

·        Closing inventory: 2,000 Units

·        Direct materials: RM240

·        Direct labour: RM280

·        Variable manufacturing overhead expenses: RM100

·        Variable selling and administrative expenses: RM40

·        Fixed manufacturing overhead expenses: RM1,200,000

·        Fixed selling and administrative expenses: RM800,000

Required: 

Using the data given above, 

1. Compute the unit product cost of one bike under:

    - Absorption costing system.

    - Variable costing system.

2. Income statement

   - Absorption costing system.

   - Variable costing system.