marks) S 1 PART B: Answer both questions. Show calculations clearly. 20 marks each. Total 40 marks 6. Kaddir Products LLC uses a job order cost system. For a number of months, there has been an ongoing rift between the sales department and the production department concerning a speciat order product, SPL1. This is a seasonal product that is manufactured in batches of 1,000 units. It is sold at cost plus a mark-up of 40% of cost. The sales department is unhappy because fluctuating unit production costs significantly affect selling prices causing excessive customer complaints and the loss of considerable orders for SPL1. The production department maintains that each job order must be fully costed on the basis of the costs incurred during the period in which the goods are produced. Production personnel maintain that the only real solution is for the sales department to increase sales in the slack periods. Ossama Eliwa, president of the company, asks you as the company accountant to collect quarterly data for the past year on SPL1. From the cost accounting system, you accumulate the following production quantity and cost data. COSIS Direct materials Director Minulsturing overhead local 1001000 60.000 105,000 265,000 Quarter 13 220.000 80000 132.000 48.000 155.000 97,000 1505,000 225.000 209.000 120.000 1125,000 445.000 Instructions Answer the following questions (20 marks) (a) What manufacturing cost element is responsible for the fluctuating unit costs? Why? (05 marks) (b) What is your recommended solution to the problem of fluctuating unit cost? (10 marks) (c) Restate the quarterly data on the basis of your recommended solution (05 marks)