Question 2: Cost allocation & Inventory [23 marks] Part A Compare the application of departmental overhead rates for product costing to the application of activity-based costing for product costing, by describing the costs and benefits of using each method. (10 marks) Part B SNP Ltd started its operations on 1 January 2020, and the planned production for the year was 20,000 units. This production level was achieved, but only 18,500 units were sold at $80 each. Other relevant data are as follows: Direct material used Direct labour cost incurred Fixed manufacturing overhead (actual and planned) Variable manufacturing (actual and planned) Fixed selling and administrative expenses Variable selling and administrative expenses $ 240,000 120,000 150,000 72,000 180,000 27,000 Required: Show all your workings. ) Calculate the cost per unit under variable and absorption costing. (2 marks) (i) Prepare an income statement for SNP Ltd for the year ending 31 December 2020 using variable costing (7 marks) (iii) Prepare an income statement for SNP Ltd for the year ending 31 December 2020 using absorption costing. (4 marks)