Practice Question (The following question is to be used for self stud session) Just Toys Ltd. is a firm that produces stuff toys at the Montego Bay Free Zone. Details of the expected number of stuff toys to be produced and sold for the last two quarters of the calendar year 2003 are budgeted as follows: Quarter Ending December 1.200 15,000 16,000 Quarter Ending September 13,000 12,000 on Sales Selling per toy: 14.00 rect 3.00 10.00 Normal output is 56,000 units per annum and this amount is used for the calculation of fixed production overhead. Fixed production overhead accounts for the only production overhead variance. Fixed overhead expenditure and the production of stuff toys are spread evenly throughout the year. There were no stuff toys in inventory at July 1, 2003. Marketing and administrative costs are: Variable Fixed 15% of sales revenue S480,000 per annum Required: a) Prepare income statements for the quarters ended September 30,2003 and December 31,2003 on the basis of marginal costing b) Explain why the profit calculated under marginal costing would be different from the profit calculated as per total costing. Univevnity of the West Jadies Indveduction to Cast and Management deaunting