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Question #1 ABC Ltd is considering using direct costing method for decision making instead of absorption costing method. Following data has been summarized for that purpose: Units Units RS Annual Maximum Plant capacity Annual Normal Plant capacity Fixed Factory overhead for the year Fixed Marketing Expenses for the year Fixed Administrative expenses for the year Sales price per unit Standard variable manufacturing cost per unit Variable marketing expenses per unit sold Budgeted production for the year Actual production for the year Sales for the year Opening finished goods inventory Rs. 50,000 40,000 500,000 100,000 150,000 1,000 400 100 40,000 30,000 28,000 1,000 Rs. Unit Unit Unit Unit Required: (a) Income statement for the year under direct method. (b) Operating income for the year if absorption costing had been used