3. Mabel pic manufactures one of its products, the Expectation, with 10 direct materials per unit and 20 labour costs per unit. Employees are paid 10 per hour. Each unit of product spends 3 machine hours in the mixing department and 5 machine hours in the finishing department. The mixing department has total annual fixed production costs of 109,890 and uses 66,600 machine hours each year. The finishing department uses 96,200 hours per annum and has annual fixed costs total annual fixed production costs of 224,146. The administration and selling departments together incur a 3 variable cost per unit sold and have a total fixed cost of 40,000. Mabel plc started the year 2020 with 400 units of the Expectation in stock and during the year 2020, manufactured a further 4,800 units. 5,000 units of the Expectation were sold at 60 per unit. Required: (a) Calculate: (0) the absorption rate for the mixing department and the absorption rate for the finishing department, both based on machine hours. (2 marks) (ii) the absorption cost per unit of Expectation (3 marks) (b) Calculate the marginal cost per unit of Expectation. (1 mark) (c) Construct a profit statement showing the gross profit and net profit for the Expectation for the year 2020 using absorption costing. (6 marks) (d) Construct a profit statement showing the contribution and net profit for the Expectation for the year 2020 using marginal costing (assume that the share of fixed production cost associated with the Expectation is 79,680). (6 marks) (e) Briefly explain why the net profit is lower for absorption costing than marginal costing in this particular scenario. (2 marks) TOTAL 20 MARKS