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0. No. 02 z Limited is considering its plans for the year ending 31 December 2001. It makes and sells a single product, which has budgeted costs and selling price as follows: Rs. per unit Selling price 81.0 Direct materials 19.8 Direct labour 14.4 Production overhead: Variable 7.2 Fixed 5.4 Selling overhead: Variable 9.0 Fixed 3.6 Administration overhead: Fixed 5.4 Fixed overhead costs per unit are based on a normal annual activity level of 172,800 units. These costs are expected to be incurred at a constant rate throughout the year. Activity levels during January and February 2001 are expected to be: January February Units Units Sales 12600 15750 Production 15300 13950 Assume that there will be no stocks held on 1 January 2001. Required: (a) Prepare, in columnar format, profit statements for each of the two months of January and February 2001 using: absorption costing: (ii) marginal costing (b) Reconcile and explain the reasons for any differences between the marginal and absorption profits for each month which you have calculated in your answer to (a) above