coogle Limited manufactures and sells hand sanitizers. The company normally allocates manufacturing overheads to production units using
Question:
coogle Limited manufactures and sells hand sanitizers. The company normally allocates manufacturing overheads to production units using direct labour hours. It takes 12 minutes to produce one bottle of hand sanitizer. Standard production for a typical month is 80 000 bottles. The budgeted fixed manufacturing overheads amount to R648 000 per annum. There were 18 000 bottles of hand sanitizer in stock on 1 March 2020. There were 23 000 bottles of hand sanitizer in the finished goods storeroom on 31 March 2020. Coogle Limited sold 80 000 units in March 2020. Manufacturing and non-manufacturing costs during March 2020 were as follows:
Direct material R106250
Direct labour R340000
Variable manufacturing overheads R56100
Fixed administration cost R60000
Fixed manufacturing overheads R57000
(actual)
Variable marketing and administration R160000
cost
The variable non-manufacturing costs varied according to the units sold. The hand sanitizers were sold at R20 per bottle during March 2020. In April 2020, the company decided to increase the sales price per unit by 10% because the fixed administration cost increased by R20 000 from 1 April 2020. All other factors remained unchanged.
The company manufactured 78 000 bottles of hand lotion during April 2020. There were 13 500 bottles of hand sanitizer in the finished goods storeroom on 28 April 2020.
REQUIRED:
Prepare the Direct and Absorption Costing income statements for Coogle Limited for April 2020 in your notebook. Note: Round off all costs per unit and totals to the nearest R1. For example: R7.58 per unit = R8 per unit. ALL UNIT COSTS SHOULD BE ROUNDED OFF TO THE NEAREST R1 BEFORE PROCEEDING WITH CALCULATIONS.
Expert Answer:
