Question 2 PQ Ltd makes and sales a single product, Y, and has budgeted the following figures for a one year period Sales, in units 160,000 K Sales 6,400,000 Production costs: Variable 2,560,000 Fixed 800,000 Selling, distribution and administration costs: Variable 1,280,000 Fixed 1,200,000 5,840,000 560,000 Fixed costs are assumed to be incurred evenly throughout the year. At the beginning of the year, there were no stocks of finished goods. In the first quarter of the year 55,000 units were produced and 40,000 units were sold. Required (a) Prepare profit statements for the first quarter, using the following: 1. Marginal costing. 2. Absorption costing. [15 marks) (b) Reconcile the profit figures obtained under the two profit statement in (a). [5 marks) Total [20 marks)