Sessegnon Ltd manufactures a single product that is sold for 40 per unit. Details of the costs for the product are as follows: Variable costs per unit: Production 20 Selling and administration 4 Monthly fixed costs: Production 50,000 Selling and administration 6,500 Fixed production costs are absorbed on the basis of 6,250 budgeted units of production per month. During Month 5 the actual production was 6,000 units and 5,500 units were sold. The opening stock was 1,000 units and 1,500 units remained in stock at the end of the month. (a) Prepare profit statements for Month 5 using: (i) absorption costing (ii) marginal costing. (b) Prepare a statement that reconciles the absorption costing profit and marginal costing profit for Month 5 as calculated in (a). (c) Briefly explain why the difference in profits has arisen. (d) Discuss the usefulness of marginal costing for short-term decision making. (6) (4) (6) (Total for Question 4 = 20 marks) 9 Turn over