(Please see the data for the month attached as image) The company produces the same number of units every month, although the sales of units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month.(where applicable, round off amounts to two decimal places)1. Prepare an income statement for the month using the absorption costing method. Selling price (per unit)R116Units in opening inventory600Units manufactured2 550Units sold3 050Units in closing inventory100Variable costs per unit:Direct materialsR12,00Direct labourR50,00Variable manufacturing overheadR6,50Variable selling and administrativeR10,00Fixed costs:Fixed manufacturing overheadR81 000Fixed selling and administrativeR19 000

Absorption costing allocates fixed overhead expenses to each unit of a product produced throughout…

Answered: Selling price (per unit) R116 Units in…

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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(Please see the data for the month attached as image) The company produces the same number of units every month, although the sales of units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month.(where applicable, round off amounts to two decimal places)

1. Prepare an income statement for the month using the absorption costing method.

Selling price (per unit)
R116
Units in opening inventory
600
Units manufactured
2 550
Units sold
3 050
Units in closing inventory
100
Variable costs per unit:
Direct materials
R12,00
Direct labour
R50,00
Variable manufacturing overhead
R6,50
Variable selling and administrative
R10,00
Fixed costs:
Fixed manufacturing overhead
R81 000
Fixed selling and administrative
R19 000

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