Mantelli Manufacturers, which produces chairs, commenced trading on 01 March 2023. During the first month of operations the sales and production volumes were 4 600 units and 5 000 units respectively. Fixed manufacturing costs and fixed administration costs totaled R36 000 and R24 000 respectively. Variable manufacturing costs and variable selling costs amounted to R44 per unit and R26 per unit respectively. The chairs were sold for R190 each. During April 2023 the sales and production dropped to 4 200 units and 4 600 units respectively. The selling price increased to R200 per chair. Variable manufacturing costs increased to R50 per unit whilst the variable selling costs increased by R4 per unit. Fixed manufacturing costs increased to R46 000 whist the fixed administration costs increased by R2 000. The first-in-first-out method for valuing inventories is used. Mantelli Manufacturers was using the absorption costing method to prepare its income statement but the financial manager but has been advised to use the variable costing method as it offered many benefits 1. Prepare the Income Statement for the month ended 30 April 2023 using the variable costing method.  2. Prepare the Income Statement for the month ended 30 April 2023 using the absorption costing method. Do not give answer in image formate

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Mantelli Manufacturers, which produces chairs, commenced trading on 01 March 2023. During the first month of operations the sales and production volumes were 4 600 units and 5 000 units respectively.

Fixed manufacturing costs and fixed administration costs totaled R36 000 and R24 000 respectively.

Variable manufacturing costs and variable selling costs amounted to R44 per unit and R26 per unit respectively.

The chairs were sold for R190 each.

During April 2023 the sales and production dropped to 4 200 units and 4 600 units respectively.

The selling price increased to R200 per chair.

Variable manufacturing costs increased to R50 per unit whilst the variable selling costs increased by R4 per unit.

Fixed manufacturing costs increased to R46 000 whist the fixed administration costs increased by R2 000.

The first-in-first-out method for valuing inventories is used.

Mantelli Manufacturers was using the absorption costing method to prepare its income statement but the financial manager but has been advised to use the variable costing method as it offered many benefits

1. Prepare the Income Statement for the month ended 30 April 2023 using the variable costing method. 

2. Prepare the Income Statement for the month ended 30 April 2023 using the absorption costing method.

Do not give answer in image formate 

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

Calculate the value of the fixed manufacturing costs in the opening and closing inventories,
using the absorption costing method.

Solution
Bartleby Expert
SEE SOLUTION
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education