COURSE WORK 1: Unit 3- Marginal and Absorption Costing (10%) Due date February 19, 2021 (Individual Problem Solving) Comparison of actual costing methods The Tyle City manufactures and sells a variety of tiles for its' domestic and international markets. The following data cover the two latest financial years of operations ending December 31: Unit Data Beginning inventory Production Sales Ending inventory 2007 0 6000 4000 2000 2008 2000 6500 7500 1000 Additional data $99 Selling price Standard variable manufacturing costs per unit Standard variable marketing costs per unit Standard fixed manufacturing costs per month Standard fixed marketing costs per month $20 $19 $128, 000 $104,000 Budgeted denominator level of production per month 8000 output units The standard variable manufacturing costs per unit of $20 includes $11 for direct materials. Assume all fixed manufacturing costs are indirect product costs. The standard fixed manufacturing cost per unit is $16. REQUIRED: 1. Prepare income statement based on (a) variable costing and absorption costing for each year. 30 marks 2. Prepare a reconciliation and explanation of the difference in the operating income for each year resulting from the use of absorption costing and variable costing. 5 marks 3. Give two advantages and two disadvantages of using variable costing for internal reporting. 4 marks 4. Calculate the total variable and manufacturing costs per unit. 6 marks n C