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 $2024$:

$\backslash$table$[[$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,$18000]]$