that 2 Conte ad absorption pred Direc lculation of overhead abso differences in profits. A act with the following you over IM7.5 Batermediate: Calcula and an explanation of the diffe manufactures a single product per unit: Direct materials Direct Labour Manufacturing overhead 7.00 15.50 12.00 is 36.00 per unit. Fate 0000 to selling price of the product is $36.00 is are expected to be 134000 acturing costs are expected to be analysed as manufacturing costs are expected period. Fixed non manufacturing 875000. Fired manufactur Faed manufacturing costs can be an Service department General follows: Department factor Production 265000 23000 465000 380000 tion is as follows: al factory' costs represent space costs, for exa rates, lighting and heating. Space utilization is as fe Production department 1 Production department 2 Service department 40% 50% 10% S per cent of service department costs are labour related and the remaining 40 per cent machine related. Normal production department activity is: Machine Direct labour Department 1 Department 2 80000 100 000 Production hours units hours 2400 120000 2400 120000 Faed manufacturing overheads are absorbed at a predetermined rate per unit of production for each production department, based upon normal activity. Required: (a) Prepare a profit statement for a period using the full absorption costing system described above and Showing each element of cost separately. Costs for the period were as per expectation, except for additional expenditure of 20000 on foxed manufacturing overhead in Production Department 1. Production sales were 116 000 and 114000 units respective ement for a prescribed aboosts for rred the period. (b) Prepare a profit statement for the period using man costing principles instead. (c) Contrast the general effect on profit of using abso and marginal costing systems, respectively. (Use figures calculated in (a) and (b) above to illustrate yo answer.) units respectively for (14 marks) Sing marginal (5 marks) & absorption (6 marks ACCA Cost and Management Accounting IM7.6 Advanced: Preparation and