The Shokhina Company sells its Alta at Tk. 3 per unit. The company uses FIFO actual...

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The Shokhina Company sells its Alta at Tk. 3 per unit. The company uses FIFO actual costing system. A new fixed manufacturing overhead allocation rate is computed each year by dividing the actual fixed manufacturing overhead cost by a actual production units. The following data are related to its first two years of operation: Sales Production Variable manufacturing cost Fixed manufacturing cost Variable marketing & administrative cost Fixed marketing & administrative cost Year - 1 1,000 units 1,400 units Tk. 700 Tk. 700 Tk. 1,000 Tk. 400 Year -2 1,200 units 1,000 units Tk. 500 Tk. 700 Tk. 1,200 Tk. 400 Required: 1. Prepare income statements for each of the years under variable costing and absorption costing. 2. Prepare a reconciliation and explanation of the difference in the operating income for each year. The Shokhina Company sells its Alta at Tk. 3 per unit. The company uses FIFO actual costing system. A new fixed manufacturing overhead allocation rate is computed each year by dividing the actual fixed manufacturing overhead cost by a actual production units. The following data are related to its first two years of operation: Sales Production Variable manufacturing cost Fixed manufacturing cost Variable marketing & administrative cost Fixed marketing & administrative cost Year - 1 1,000 units 1,400 units Tk. 700 Tk. 700 Tk. 1,000 Tk. 400 Year -2 1,200 units 1,000 units Tk. 500 Tk. 700 Tk. 1,200 Tk. 400 Required: 1. Prepare income statements for each of the years under variable costing and absorption costing. 2. Prepare a reconciliation and explanation of the difference in the operating income for each year.

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