Question 20 The following data has been extracted from the budgets and standard costs of Kerry Limited, a company which manufactures and sells a single product. 1. The selling price and production costs per unit are as follows: $ Selling price 45.00 Direct material cost 10.00 Direct labour cost 4.00 Variable overhead cost 2.50 2. Fixed production overhead costs are budgeted at $400,000 per annum. Normal production levels are estimated at 320,000 units per annum. 3. Budgeted selling and distribution costs are as follows: Variable costs $1.50 per unit sold Fixed costs $80,000 per annum 4. Budgeted administration costs are $120,000 per annum. 5. The following pattern of sales and production is expected for the first two quarters of next year: 1st quarter 2nd quarter Sales (units) 60,000 90,000 Production (units) 70,000 100,000 There will be no opening inventory at the beginning of the first quarter Inventory is valued on a First in first out (FIFO) basis. Required: ) Prepare a forecast Income Statement in columnar form for each of the first two quarters, using marginal costing. b) Prepare a forecast Income Statement in columnar form for each of the first two quarters, using absorption costing. You must show opening and closing inventories in your calculations of a) and b)