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To solve this problem, we need to prepare an income statement for MST Enterprise using marginal costing for April 2016, where two products, PQ and QP, are manufactured. I’ll walk through the steps to set up the income statement using marginal costing.

### Information Summary:

1. **Sales Data**:
   - Product PQ: 
     - Sales units: 10,000 
     - Selling price per unit: 20
   - Product QP: 
     - Sales units: 5,000 
     - Selling price per unit: 30

2. **Cost per Unit**:
   - Product PQ:
     - Direct materials: 8
     - Direct labor: 4
     - Variable production overheads: 2
     - Variable sales overheads: 1
   - Product QP:
     - Direct materials: 14
     - Direct labor: 4
     - Variable production overheads: 2
     - Variable sales overheads: 3

3. **Fixed Costs** (monthly):
   - Production costs: 40,000
   - Administrative costs: 15,000
   - Sales and distribution costs: 25,000

4. **Production and Budgeted Data**:
   - Production units: 15,000 for PQ and 6,000 for QP
   - Budgeted fixed production overheads: 45,000 for a normal combined output of 22,500 units.

### Solution Steps:

1. **Calculate Total Sales**:
   - For PQ: \(10,000 \text{ units} \times 20 = 200,000\)
   - For QP: \(5,000 \text{ units} \times 30 = 150,000\)
   - **Total Sales = 200,000 + 150,000 = 350,000**

2. **Calculate Variable Costs**:
   - **Total Variable Costs for PQ and QP (based on units sold)**:
     - **PQ**:
       - Direct materials = \(10,000 \times 8 = 80,000\)
       - Direct labor = \(10,000 \times 4 = 40,000\)
       - Variable production overheads = \(10,000 \times 2 = 20,000\)
       - Variable sales overheads = \(10,000 \times 1 = 10,000\)
       - **Total Variable Cost for PQ = 80,000 + 40,000 + 20,000 + 10,000 = 150,000**
     - **QP**:
       - Direct materials = \(5,000 \times 14 = 70,000\)
       - Direct labor = \(5,000 \times 4 = 20,000\)
       - Variable production overheads = \(5,000 \times 2 = 10,000\)
       - Variable sales overheads = \(5,000 \times 3 = 15,000\)
       - **Total Variable Cost for QP = 70,000 + 20,000 + 10,000 + 15,000 = 115,000**

   - **Total Variable Costs = 150,000 + 115,000 = 265,000**

3. **Calculate Contribution Margin**:
   - **Contribution Margin = Total Sales - Total Variable Costs**
   - Contribution Margin = \(350,000 - 265,000 = 85,000\)

4. **Deduct Fixed Costs**:
   - Fixed Production Costs: 40,000
   - Administrative Costs: 15,000
   - Sales and Distribution Costs: 25,000
   - **Total Fixed Costs = 40,000 + 15,000 + 25,000 = 80,000**

5. **Calculate Net Profit**:
   - **Net Profit = Contribution Margin - Total Fixed Costs**
   - Net Profit = \(85,000 - 80,000 = 5,000\)

### Income Statement for April 2016 (Marginal Costing)

| Description                    | Amount (Sh) |
|--------------------------------|-------------|
| Sales                          | 350,000     |
| Variable Costs                 | 265,000     |
| Contribution Margin            | 85,000      |
| Fixed Costs                    | 80,000      |
| **Net Profit**                 | **5,000**   |

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Would you like more details on the calculations or have any questions?

Here are some additional questions to expand your understanding:
1. How would absorption costing affect this income statement differently?
2. What if production units exceeded sales units? How would this impact profit?
3. How do fixed costs distribute across products in marginal costing?
4. Can changes in variable cost per unit affect the contribution margin significantly?
5. What is the breakeven point for each product in terms of units sold?

**Tip:** Understanding the impact of fixed versus variable costs on profitability can help in making better pricing and production decisions.

Prepare the income statement for the month of April 2016 using marginal costing for MST enterprise, which manufactures two products, PQ and QP.

This guide details the income statement preparation for MST Enterprise using marginal costing for April 2016, covering two products, PQ and QP. Learn how to calculate total sales, variable costs, contribution margin, and net profit using provided unit costs, sales data, and fixed costs.

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