there was no stock of finished goods at the start of june year 5 there was no wastag 644076

Resistor Ltd manufactures electrical units. All units are identical. The following information relates to June and July Year 5.

(a) Budgeted costs and selling prices were:

	June £		July £
Variable manufacturing cost per unit		2.00	2.20
Total fixed manufacturing costs (based on budgeted		40,000	44,000
output of 25,000 units per month)
Total fixed marketing cost (based on budgeted sales		14,000	15,400
of 25,000 units per month)
Selling price per unit		5.00	5.50

(b) Actual production and sales recorded were:

	Units	Units
Production	24,000	24,000
Sales	21,000	26,500

(c) There was no stock of finished goods at the start of June Year 5. There was no wastage or loss of finished goods during either June or July Year 5.

(d) Actual costs incurred corresponded to those budgeted for each month.

Required

Calculate the relative effects on the monthly operating profits of applying:

(a) absorption costing;

(b) marginal costing.