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Section B Answer any one (1) question from this section [20 Marks] Question 3 PARTA [13 Marks Lively Inc manufactures a single product and is considering whether to use marginal or absorption costing to report its budgeted profit in its management accounts. The following information is available: Swait Duect materials 4 Direct labour 15 Total variable cost per unit $19 Additional information: 1) Units are sold at $50 per unit 2) Fixed production overheads are budgeted to be $300,000 per month and are absorbed on an activity level of 100,000 units per month 3) Sales are expected to be 100,000 units for the month and production will be 120,000 units. 4) Fixed selling costs of $150,000 per month will need to be included in the budget. 5) Variable selling costs of $2 per unit. 6) There are no opening stocks 7) Clearly show the valuation of any stock figures. Required: a) Prepare the budgeted income statement for a month using absorption costing b) Prepare the budgeted contribution statement using marginal costing .) Explain the term sunk cost and provide an example to support your answer [6 Marks] [4 marks 13 Marks] QUESTION 3 Quanti 3 (Conti PARTB Marte C&Emes a predetermined overhead rate of $42.80 per direct labour-hour. This predetermined rate was based on a cost formula that estimated $342.400 of total manufacturing overhead for an estimated Activity level of 16,000 direct labour-hours. The company incurred actual total memfacturing overhead coats of $345,000 od 16,500 total direct Inbour-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 15 Marks 2. What would be the effect of the underapplied or overapplied overhead computed in part have on the company's gros mergin for the period? 12 Marks] 1 QUESTION 1 PARTA-COMPULSORY SECTION 4 - COMPULSORY Question 1 [20 Macks] PARTA [13 Marks) ARG Ine manufactures and sells a single product. The following data have been extracted from the current year's budget Sales and production (units) 5,000 Variable cost per un $50 Fixed cost per unit Contribution margin ratio 75% The selling price per unit for next year is to be 8% above the current year's bulgeted figure, whereas both the variable cost per unit and the total fixed costs are forecast to increase by 12% above their budgeted level in the current year $70 The target for next year is that total profit should remain the same as that budgeted for the current year. Required: a) Calculate the CURRENT YEAR budgeted: i Contribution per unit, [2 marks] 1. Total profit [3 marks it. Breakeven point in units [2 marks] b) Calculate the number of units the company should produce and sell next year to achieve a target profit of $100,000 16 marks