QUESTION $2$

$(20$ Marks$)$

$2\mathrm{.}1$

REQUIRED

Study the information provided below and prepare the Income Statement for the year ended $31$ December $2023$ using the marginal costing method.

INFORMATION

$(11$ marks$)$

Marburg Manufacturers started operations on $02$ January $2023.$ It produced $50000$ units of the only product that it manufactures and sold $80\%$ of the units produced at a price of R$150$ per unit during $2023.$ Variable manufacturing costs amounted to R$50$ per unit and variable marketing costs amounted to R$30$ per unit. Fixed costs totalled R$1200000$ of which $70\%$ was for manufacturing and $30\%$ was for administration and marketing.

$2\mathrm{.}2$

REQUIRED

Use the information given below to calculate the following variances. In each case also state whether the variance is favourable or unfavourable.

$2\mathrm{.}2\mathrm{.}1$ Material quantity variance

$(3$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Total labour variance $($without using the labour rate and efficiency variances$)$

$(3$ marks$)$

$2\mathrm{.}2\mathrm{.}3$ Variable manufacturing overheads expenditure variance

$(3$ marks$)$

INFORMATION

Sona Manufacturers uses the standard costing system. The standards are as follows:

$\backslash$table$[[$Direct material,$3kg$@ R$8$ per kg$],[$Labour$,5$ hours at R$100$ per hour$],[$Variable manufacturing overheads,R$20$ per labour hour$],[$Fixed overheads,R$30000],[$Normal production,$19000$ units$]]$

$\backslash$table$[[$Actual information for March $2024$:$],[$Direct material used,$61000kg$ at R$7\mathrm{.}80$ per kg$],[$Labour$,98000$ hours at R$105$ per hour$],[$Variable manufacturing overheads,R$1862000],[$Fixed overheads,R$32000],[$Actual production,$20000$ units$]]$