Q2: Variable and Absorption Costing Total marks for this question: 25 marks [Suggested time: 30 minutes] The following questions are based on Larue Corporation, which produces a single product it sells for $12 per unit. Of the 100,000 units produced, 80,000 were sold during year 1; all ending inventory was in finished- goods. Larue had no inventory at the beginning of the year. Direct material (unit-level cost) $ 240,000 Direct labor (unit-level cost) 160,000 Factory overhead (unit-level cost) 80,000 Factory overhead (facility-level cost) 240,000 Selling and administrative cost (unit-level cost) 80,000 Selling and administrative (facility-level cost) 128,000 REQUIRED 1. Calculate the unit cost using: (i) Absorption costing system (4 marks) (ii) Variable costing system (3 marks) 2. Calculate operating profit using (i) Variable costing system (7 marks) (ii) Absorption costing system. (6 marks) 3. Explain the benefits of adopting a variable costing system