aph lon Malindi Lts started operation in the 3rd quarter of 2008. The company makes a single product, plasma, whose selling price is Sh 300 per unit. Given below is the budgeted production of the product for the last 2 quarters of 2008 Quarter 3 Quarter 4 Budgeted output [units] 10 000 8 000 Sales [units] Z 500 9 000 Unit product costs are expected to remain constant within the budget period and are summarized as below: Shs Direct material 60 Direct labour Variable overheads 75 40 Each unit of the product uses 3 direct labour hours. The fixed overheads for the 2 quarters were budgeted at Shs Sh 1 080 000. In addition, the selling and administration overheads are budgeted as follows: Shs Fixed selling & admin costs 180 000 Variable selling costs 5% of sales Required a) Determine the fixed overheads absorption rate for the budget period b) Prepare the budgeted income statements for each of the 2 periods under 1) Absorption costing basis 11) Marginal costing basis c) Explain the difference between the profits reported under the 2 methods of reporting