CJ Company's first two years of operations, the company reported profit as follows (absorption costing basis): Sales (@30) Year 1 750,000 Year 2 1,050,000 Less cost of goods sold: Beginning stock 80,000 Add cost of goods manufactured (@ 480,000 480,000 16) Goods available for sale 480,000 560,000 Less ending stock (@ 16) (80,000) cost of goods sold Gross margin Less selling and administrative expenses* 187,500 Profit 400,000 560,000 350,000 490,000 202,500 162,500 287,500 * CJ Company produces a single single product; fixed manufacturing overhead costs are applied to the product on the basis of each year's production. Variable selling and administrative expenses are 1.5 per unit sold, and fixed 150,000 each year. The statements above show the results of the first two years of operation. In the first year, the company produced 30,000 units and sold 25,000 units; in the second year, the company again produced 30,000 units and sold 35,000 units. The company's 16 unit product cost is computed as follows: Direct materials Direct labour 2 Variable manufacturing overhead per unit 2 Fixed manufacturing overhead costs per unit (240,000/30,000) 8 Unit product cost 16 16 Required: (a) Compute the unit product cost for each year under: (i) Absorption costing. (ii) Variable costing. [2 marks] (b) Prepare a profit and loss account for each year, using variable costing format. [5 marks] (c) Reconcile the variable costing and absorption costing profit figures for each year. [5 marks] (d) Explain three fundamental assumptions underpinning single product breakeven analysis. [7 marks] (e) Based upon marginal costing calculate: (i) the annual breakeven sales value; and (ii) the activity level, in units, which will yield an annual profit of 350,000