QUESTION 2
(20 MARKS)
REQUIRED
2.1
Use the information provided below to prepare the Income Statement
of Pescatore Manufacturers for the month ended 31 May 2019 using
the:
2.1.1
Variable costing method.
(9 marks)
2.1.2
Absorption costing method.
(8 marks)
2.2
Reconcile the profit calculated according to variable costing (in
question 2.1.1) with the profit calculated according to absorption
costing (in question 2.1.2).
(3 marks)
INFORMATION
The following information relates to the only product produced by
Pescatore Manufacturers for the month ended 31 May 2019:
Sales price per unit
R360
Direct materials cost per unit
R60
Direct labour cost per unit
R120
Variable manufacturing overhead costs per unit
R66
Fixed manufacturing overhead costs
R360,000
Variable selling and administrative costs
5% of sales
Fixed selling and administrative costs
R135,000
Opening inventory
Nil
Number of units manufactured
36,000
Number of units sold
30,000