QUESTION 3 (25 MARKS) (a) Discuss two wes of Cost-Volume-Profit Analysis by the management of a company in their decision making (4 marks) (b) A manufacturing company with a single product has the following sales and production results over three financial periods:- Period (units) Sales Period 2 (units) 60.000 40.000 Period (units) 40.000 60000 50,000 70,000 Production The selling price per unit has remained at $10. The direct material cost per unit is $3 and the direct labour costa per unit is $2. All manufacturing overheads are allocated into product cost at predetermined rates per unit of output. Any under over applied balances are transferred to the statement of profit or loss in the period in which they are incured Variable manufacturing overhead applied was determined at a rate of $1 per uit in each period Fixed manufacturing overbeads were expected to be $180,000 per period. Normal capacity is 60,000 units of output per period. Manufacturing overbeads actually incurred were as follows:- Period 1 Period 2 Variable $70,000 $40.000 Fixed $190,000 $190.000 Periods $60,000 $180,000 Assume that no further overheads are incurred (Le other than manufacturing overheads). Required: Calculate the expected break-wen point per period. (3 marks) Calculate the profit loss that arose in each of the three periods under absorption costing (9 marles) Calculate the contribution margin that arose in each of the three periods under variable costing (3 marles) Reconcile your answers to ) and (ii) above, clearly demonstrating and explaining the reasons for any difference encountered, (3 marks) Explain the reason why there are differences in operating income between variable coating and absorption costing (3 marks) (v (3+9+3+3+3 = 21 marks)