Intermediate: Preparation of variable and absorption costing profit statements andCVP analysisR Limited is considering its plans for the year ending $31$ December $2001.$ It makes and sells a single product, which has budgeted costs and selling price as follows:$$ per unit$45$Selling priceDirect materialsDirect labour$118$Production overhead:variablefixed$43$Selling overhead:variablefixedAdministration overhead:fixedJanuaryFebruaryunitsunitsSales$70008750$Production$8500775023$Fixed overhead costs per unit are based on a normal annual activity level of $96000$ units. These costs are expected to be incurred at a constant rate throughout the year.Activity levels during January and February $2001$ are expected to be:Assume that there will be no stocks held on $1$ January $2001.$Required:$($a$)$ Prepare, in columnar format, profit statements for each of the two months of January and February $2001$ using:$($i$)$ absorption costing; $($ii$)$ marginal costing.$(12$ marks$)($b$)$ Reconcile and explain the reasons for any differences between the marginal and absorption profits for each month which you have calculated in your answer to$($a$)$ above.$(3$ marks$)($c$)$ 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 $122800.(6$ marks$)($d$)$ Explain $3$ fundamental assumptions underpinning single product breakeven analysis.$(6$ marks$)($Total $27$ marks$)$CIMA Stage $2-$ Operational Cost Accounting