QUESTION 3 (26 Marks) A company which produces a single product has provided the following forecast of its sales and production units for the coming two months. MONTH 1 MONTH 2 units units Production 300 400 Sales 250 500 Opening stock 100 150 8 Per unit RM Direct materials Direct labour 1 Variable factory overhead 2 Fixed factory overhead Production cost Variable selling overhead Fixed selling overhead 1 Net profit 2 Selling price 12 The above unit cost for fixed factory overhead and fixed selling overhead are based on a monthly budget of 300 units produced and sold. Required: i. Prepare budgeted profit and loss account for each Month 1 and Month 2 in tabular format using the absorption costing principle (8 marks) ii. Prepare budgeted profit and loss account for each Month 1 and Month 2 in tabular format using the variable costing principle (12 marks) ili. Reconcile the profits of both the methods for month 1 and 2 and explain the differences in the profit between the absorption costing and marginal costing in each of the two months. (6 marks)