Questions on Marginal Costing Techniques

Your name Nig. Ltd presents you with the following data about its operations for the quarter ended 31/12/2015

• Selling price per liter N50
• Direct material per liter N20
• Direct labor per liter N15
• Variable production overhead per liter N5
• Fixed production overhead cost N600,000
• Other fixed costs N100,000
• Sales commission per liter N3
• Quantity sold 180,000 liters
• Closing stock 80,000

You are required to prepare an income statement for the quarter ended 31/12/2015 using:

1. Absorption Costing Technique.
2. Marginal Costing Technique.
3. Show reconciliation of profit between the two methods.

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