1. In Year 1, Fardon Ltd started to produce its sole product. As planned, 40,000 units were produced and sold for 30 each. Variable costs per unit were 5 and fixed manufacturing overhead amounted to 600,000. After Sales and Administration fixed costs there was a net income of 100,000. The company uses an absorption costing system with pre-determined absorption rates based on planned levels of activity. Required: i) Produce an Income Statement for Year 1 calculating the net profit. (3 marks) ii) Produce an Income Statement for Year 2, based on the assumption that the production level planned and produced was 50,000 units. Sales remain at 40,000 units. (4 marks) iii) Produce an alternative Income Statement for Year 2, assuming that the planned level of production remains 40,000 but 50,000 units are actually produced. Sales remain at 40,000 units. (5 marks) iv) Briefly indicate the factors that result in differences in profit between a, b and c. (2 Marks)