QUESTION $2$

$(20$ MARKS$)$

REQUIRED

$2\mathrm{.}1$

Use the information provided below to prepare the Income Statement of Turbo Manufacturers for the month ended $31$ August $2024$ using the following methods:

$2\mathrm{.}1\mathrm{.}1$

Variable costing.

$(9$ marks$)$

$2\mathrm{.}1\mathrm{.}2$

Absorption costing.

$(9$ marks$)$

$2\mathrm{.}2$

Reconcile the profit calculated according to variable costing $($in question $2\mathrm{.}1\mathrm{.}1)$ with the profit calculated according to absorption costing $($in question $2\mathrm{.}1\mathrm{.}2).$ Your answer must include the calculation of the fixed manufacturing costs in inventory.

$(2$ marks$)$

INFORMATION

The following information relates to the only product produced by Turbo Manufacturers for the month ended $31$ August $2024$:

Sales price per unit

R$300$

Direct materials cost per unit

R$50$

Direct labour cost per unit

R$100$

Variable manufacturing overhead costs per unit

R$55$

Variable selling and administrative costs

$5\%$ of sales

Fixed manufacturing overhead costs per month

R$300000$

Fixed selling and administrative costs per month

R$100000$

Opening inventory

Nil

Number of units manufactured

$20000$

Number of units sold

$18000$