Question 1: Marginal costing and Absorption Costing (2.5)

Barhad manufactures and produces a type of herbal product that is sold throughout Malaysia. The cost per unit for the year 2019 is as follows:

Units in beginning inventory	0
Units produced	30,000
Units in ending inventory	5,000
Sales	25,000
Selling price per unit	$40
Manufacturing costs
Direct materials (per unit)	$10.5
Direct labor (per unit)	$9.5
Variable overhead (per unit)	$4
Fixed overhead (total)	$78,600
Selling and Administrative expenses
Variable (per unit)	$1.2
Fixed	$41,400

Required:

a. Compute product cost per unit using absorption costing and variable costing (0.5)

b. Prepare an income statement using absorption costing and variable costing (2.0)