Assume that two companies have exactly the same pattern of costs and revenue and both use FIFO when valuing stock, but that Columbus Ltd uses a marginal costing approach to the valuation of stock in its financial statements, while Steel Ltd values its stock using absorption costing. 

Calculate the gross profits for each company for each of their first three years in business from the following information:

(a) Total fixed indirect manufacturing cost is £90,000 per year.

(b) Direct labour costs over each of the three years were £9 per unit.

(c) Direct material costs over each of the three years were £15 per unit.

(d) Variable expenses which vary in direct ratio to production were £6 per unit.

(e) Sales were: Year 1: 2,700 units; Year 2: 3,600 units; Year 3: 3,300 units.

The selling price remained constant at £87 per unit.

(f) Production is at the rate of: Year 1: 3,600 units; Year 2: 3,900 units; Year 3: 3,750 units.