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QUESTION 4 [20 MARKS] Rani and Co. makes and sales one product which has the following costs sales for the product: Selling price per unit

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QUESTION 4 [20 MARKS] Rani and Co. makes and sales one product which has the following costs sales for the product: Selling price per unit P30/unit Direct material cost P5/unit Direct labour cost P3/unit Variable overheads P6/unit Fixed cost including office rent and insurance are 50,000 per month At the end of last period, 1,300 units remained in stock. During the current month, 25,000 units are expected to be produced and 17,250 units are expected to be sold. REQUIRED: a. Prepare the income statement of Rani and Co. under marginal costing principles. (7 marks) b. Prepare the income statement of the company under absorption costing principles. (6 marks) C. Prepare a reconciliation statement showing clearly how the two profit figures differ. (4 marks) d. Outline three advantages of using marginal costing (3 marks) (TOTAL: 80 MARKS] END OF ASSIGNMENT 3 Page 4 of 4

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