Question 4 1. The following information was extracted from the ledgers of Billy Company fo

Question 4

1. The following information was extracted from the ledgers of Billy Company for its products for the year ended 31 December 2002:

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Sales (100,000 units) 500,000

Direct materials 100,000

Direct wages 70,000

Fixed production overheads 110,000

Variable production overheads 20,000

Administration expenses (60% fixed, 40% variable) 80,000

Selling expenses (60% fixed, 40% variable) 130,000

Required:

(a)Prepare the Profit and Loss Statement by using Absorption Cost method.

(b)Prepare the Profit and Loss Statement by using Marginal Cost method.