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SECTION A: Answer all questions Question 1 The following data has been compiled for a product made by Egusi Ltd. The budgeted annual production is 1,500 units and the fixed production overhead is budgeted as 10,500 per annum. Unit Marginal and Absorption costs are as follows: Marginal Absorption () () Direct wages 3 Direct material Variable production overhead 2 Fixed production overhead Unit cost 11 18 3 6 6 2 11 7 11 The actual production and sales relating to June and July are as follows: June units July units Sales 100 125 Production 110 130 The selling price per unit is 45 and the variable selling cost per unit is 4. There was no opening stock at the beginning of June. Required: (a) Calculate total profit for June and July using marginal costing. (11 marks) (b) Calculate total profit for June and July using absorption costing. (15 marks) (c) Explain why the profit calculated using Absorption Costing is higher than the profit calculated for Marginal Costing for the month of June. (4 marks) (Total marks for question 1: 30 marks)