QUESTION 4 BBO Co. Ltd. is a manufacturer of glass bottles which has been affected by competition from plastic bottles and currently operating below capacity. The data below relate to BBQ Co. Ltd. which makes and sells one product (glass bottles): January February March (Units) (Units) (Units) Sales 5,000 7,000 4,000 Production 9,000 3,000 4,000 Selling price per Unit 100 100 100 Variable production cost per Unit 60 60 60 Fixed production overhead incurred 120,000 120,000 120,000 Fixed production overhead cost per unit, being the predetermined overhead absorption rate 15 15 15 Selling & Distribution cost (fixed) 50,000 50,000 50,000 Required: (a) Prepare comparative profit statements for each month using: (i) Absorption costing (ii) Marginal costing (12 arks) (b) Explain two justifications each for using both variable and absorption costing. (8 marks)