QUESTION 4 (A) (B) (1)Distinguish between variable costing and absorption costing (2 marks) How are non-manufacturing fixed costs treated under absorption and variable costing marks) systems? (2 1) What arguments can be advanced in favour of marginal costing. (2 marks) (4) What arguments can be advanced in favour of absorption (2 marks) costing 15) Explain how absorption costing can encourage managers to engage in behavior that is harmful to the organization. marks) (2 A company produces and sells one product only which sells for 50 per unit. There were no stocks at the end of May and other information is as follows: Standard cost per unit: Direct material Direct wages overhead 3 18 4 Variable production Budgeted and actual costs per month: Fixed production overhead 99,000 Fixed selling expenses 14,000 Fixed administration expenses Variable selling expenses 26,000 10% of sales value Normal capacity is 11,000 units per month. The number of units produced and sold was: June July units units Sales 12,800 11,000 Production 14,000 10,200 Required: Using the information above, prepare profit statements for June and July using: (a) Marginal costing (5 marks) (b) Absorption costing (5 marks) => (Total = 20 marks)