a$)$ Madinare is planning to produce a new product called GTY which will be used in the construction industry. This

selling price per unit of this product will be P$340\mathrm{.}00.$

The following are the unit costs of GTY:

Direct materials:

$1$ container P$10\mathrm{.}00$; $,$ Chemical PN $3$ kgs at P$10\mathrm{.}00$ per kg; Chemical QS $4kgs$ at P$17\mathrm{.}50$ per kg

Direct labour: $15$ minutes at P$80$ per hour

Variable factory overhead: Absorbed at P$140$ per direct labour hour

Fixed factory overhead: P$30,400\mathrm{.}00$ for the half year to June $2024.$ To be absorbed at a rate per unit.

Sales commission per each unit sold P$10\mathrm{.}00$

Fixed administrative costs will be P$25,000\mathrm{.}00$ per annum.

The expected production and sales for the $6$ months ended $30$ June $2024$ will be:

Production $380$ Units

Sales $365$ units, meaning $15$ units of GTY will remain as closing inventory

i$)$ Using marginal costing, showing all your workings, prepare a detailed income statement $($Statement of

profit or loss account$)$ for the half year to $30$ June $2024(10)$

ii$)$ Briefly explain any two weaknesses of using marginal costing $(2)$

b$)$ You have just received an email from the Chief Accountant $($Mekki$)$ who now believes that fixed factory

overhead costs of P$30,400$ is in fact a stepped fixed cost, and will change at each activity level of $2000$ units.

i$)$ You are to elaborate your understanding of stepped fixed costs $(2)$

ii$)$ You are also required to explain the effect of the above information on the cost per GTY unit at activity

levels of $1,400$ and $1,800$ units. $(4)$

c$)$ Edmore and Company has produced a standard cost card for its single product. The standards are given below:

Selling price per unit: $,$ P$118\mathrm{.}00$

Direct materials per unit: $,$ P$21\mathrm{.}00$

Direct labour per unit: $,$ P$80\mathrm{.}00$

Profit: $,$ P$12\mathrm{.}00$

For January $2024,$ the budgeted production and sales were $8,000$ units, while the actual sales were $6,000$ units.

You are required to find the flexed budget profit for January $2024.(7)$