QUESTION 1Prepare the Income Statement of Mary’s Manufacturers the year ended 31 December 2020 using the:1.1 Marginal costing method.1.2 Absorption costing method. INFORMATIONThe following information was extracted from the accounting records of Mary's Manufacturers for the yearsended 31 December 2020 and 31 December 2019:31 December 202031 December 2019UnitsRUnitsRSales for the year35003 700666 000?Selling price per unit200180Production for the year4 1004 000Finished goods at beginning of yearNilVariable manufacturing costs per unit5045Variable selling and administrative costs per unit252445 10024 000Fixed manufacturing costs per year36 000Fixed selling and administrative costs per year25 000Additional information1.Mary's Manufacturers uses the FIFO method for the valuation of inventory.2.The increase in the fixed manufacturing costs is due to a new rental agreement in respect of the factory. Mary commenced business in January 2019, manufacturing a single product. At the end of 2019 she calculatedher profit using the absorption costing method and was pleased with the profits that were realised. However, sherecently read that preparation of the income statement according to the marginal costing method would be morebeneficial to her. She also learnt that if there are opening or closing inventories, then the profits calculated usingthe two methods would be different.She forecasted her sales and costs for July to December 2021 and wanted to undertake cost-volume-profit(CVP) analysis since it made use of the marginal costing approach with which she was impressed.

Name: QUESTION 1Prepare the Income Statement of Mary’s Manufacturers the yea
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Description: QUESTION 1Prepare the Income Statement of Mary’s Manufacturers the year ended 31 December 2020 using the:1.1 Marginal costing method.1.2 Absorption costing method. INFORMATIONThe following information was extracted from the accounting records of Mary

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QUESTION 1 Prepare the Income Statement of Mary’s Manufacturers the year ended 31 December 2020 using the: 1.1 Marginal costing method. 1.2 Absorption costing method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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