Ericsson AB manufactures and sells a single product. The following data cover the two latest years of operations:

Required

1 Prepare two income statements for 2023, one under variable costing and one under absorption costing.

2 Explain briefly why the operating profit figures calculated in requirement 1 agree or do not agree.
3 Give two advantages and two disadvantages of using variable costing for internal reporting.

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Unit data Sales Opening stock Closing stock Selling price per unit Cost data Standard fixed costs Manufacturing overhead Marketing and administrative Standard variable costs per unit: Direct materials Direct manufacturing labour Manufacturing overhead Marketing and administrative 2022 2023 25 000 1.000 1 000 25 000 1000 5 000 SEK 40 SEK 40 SEK 120 000 SEK 190 000 SEK 120 000 SEK 190 000 SEK 10.50 SEK 9.50 SEK 4.00 SEK 1.20 The denominator level is 30 000 output units per year. Ericsson's accounting records produce variable-costing information and year-end adjustments are made to produce external reports showing absorption-costing information. All variances are charged to cost of goods sold.