The table below sets out data for the Mobile Phone Manufacturing Company for the four quarters of Year 1.

The fixed overhead production cost for each month is based on budgeted production of 1,000 units per quarter. The fixed overhead is absorbed into products on the basis of a predetermined overhead rate of £20 per unit.
Actual production fluctuates in quarters 3 and 4 due to labour problems. Actual sales fluctuate each quarter due to seasonal factors but the company meets its target for production and sales over the year as a whole.

Required

Prepare a statement of quarterly profit for each of the four quarters of Year 1 using:

(a) absorption costing; and

(b) marginal costing.

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Selling price per unit Variable cost per unit Fixed overhead production cost for each quarter Planned production Actual production Actual sales Qtr 1 units 1,000 1,000 900 Qtr 2 units 1,000 1,000 1,100 Qtr 3 units 1,000 900 900 120 70 20,000 Qtr 4 units 1,000 1,100 1,100 Total 4,000 4,000 4,000