Question: 4 R Limited is considering its plans for the year ending 31 December 2019. It makes and sells a single product, which has budgeted costs and selling price as follows: Selling price Direct materials Direct labour Production overhead: Rs. Per unit January Units 60 7000 Sales Production 9500 Assume that there will be no stocks held on 1 January 2019. 14 11 Variable Fixed Selling overhead: Variable Fixed Administration overhead: Fixed 3 Fixed overhead costs per unit are based on a normal annual activity level of 96 000 units. These costs are expected to be incurred at a constant rate throughout the year. Activity levels during January and February 2019 are expected to be: 63 6 2 February Units 9000 7750 Required: (a) Prepare, in columnar format, profit statements for the months of February 2019 using: (1) Absorption costing; Marginal costing. (b) Reconcile and explain the reasons for any differences between the marginal and absorption profits for the month which you have calculated in your answer to (a) above.

Questlon:4 R Limited is considering its plans for the year ending 31 Deceinber 2019. It makes and selis a single product, which has budgeted costs and selling price as follows: Rs. Per unit Fied overhead costs per unit are based on a norma annuar acuviry nevel of 96000 units. These costs are expected to be incurred at a constant rate throughout the vear. Activity levels during January and February 2019 are expected to be: Assume that there Will be no stocks held on 2 fanvary 201y. Required: (a) Prepare, in columnar format, profit statements for the months of February 2019 using: (i) Absorption costing: (ii) Marginal costing. (b) Reconcile and explain the reasons for amy differences between the marginal and absorption profits for the month which you have calculated in your answer to (a) above