Thotho manufactures headscarves. The following information is available in her books onDecember 31, 2012. BWOpening inventory1500Headscarves made during the year9000Head scarves sold during the year9500Closing inventory1000Selling price90Manufacturing costs Variable costs Direct material/Headscarf25Direct labour hour cost used to9 make one scarf5variable manufacturing overhead15000Fixed manufacturing overhead per year Selling and administrative costs: Commission paid for selling one scarf10fixed selling and administration costs per year100000Required:a) Prepare the income statement for the year ended December 31, 2012 usingi) Absoption costing.

Absorption costing is also known as full costing under this costing companies treat all…

Answered: Required: a) Prepare the income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Thotho manufactures headscarves. The following information is available in her books on
December 31, 2012.

	BW
Opening inventory	1500
Headscarves made during the year	9000
Head scarves sold during the year	9500
Closing inventory	1000
Selling price	90
Manufacturing costs
Variable costs
Direct material/Headscarf	25
Direct labour hour cost used to	9
make one scarf	5
variable manufacturing overhead	15000
Fixed manufacturing overhead per year
Selling and administrative costs:
Commission paid for selling one scarf	10
fixed selling and administration costs per year	100000

Required:
a) Prepare the income statement for the year ended December 31, 2012 using
i) Absoption costing.

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