Cost+accounting+-+Group... The product sells for $120 per unit. Production and sales data for July, August, and September, the first three months of operations, are shown below: Normal activity level: 14,000 units Required: a) Determine the unit product cost using i. Marginal costing [2 marks] ii. Absorption costing [3 marks] b) Prepare the income statements for August and September using: i. Marginal costing [12 marks] ii. Absorption costing [12 marks] c) Reconcile the variable and absorption costing net income figures for : i. August [4 marks] ii. September [4 marks] d) The manager of Gourmand Limited is not clear as to why the firm should use two different bases for the preparation of financial statements. He is also concerned that the two methods yielded different net income and stock valuations. Write a well-formatted memo to the manager. This memo should: i. Define the terms 'marginal costing' and absorption costing'. ii. Explain why the two methods yielded different results in September. iii. Give THREE arguments to support the use of marginal costing iv. Give THREE arguments to support the use of absorption costing v. Explain why a firm might use both methods [16 marks] Cost+accounting+-+Group... The product sells for $120 per unit. Production and sales data for July, August, and September, the first three months of operations, are shown below: Normal activity level: 14,000 units Required: a) Determine the unit product cost using i. Marginal costing [2 marks] ii. Absorption costing [3 marks] b) Prepare the income statements for August and September using: i. Marginal costing [12 marks] ii. Absorption costing [12 marks] c) Reconcile the variable and absorption costing net income figures for : i. August [4 marks] ii. September [4 marks] d) The manager of Gourmand Limited is not clear as to why the firm should use two different bases for the preparation of financial statements. He is also concerned that the two methods yielded different net income and stock valuations. Write a well-formatted memo to the manager. This memo should: i. Define the terms 'marginal costing' and absorption costing'. ii. Explain why the two methods yielded different results in September. iii. Give THREE arguments to support the use of marginal costing iv. Give THREE arguments to support the use of absorption costing v. Explain why a firm might use both methods [16 marks]