Question $2$

Answer the questions from the information provided.

Use the information given below to prepare the Income Statement for March $2022$ according to the

absorption costing method.

$2\mathrm{.}1(12$ marks$)$

INFORMATION

The following information was extracted from the accounting records of Alpha Enterprises for the month ended $31$

March $2022$:

Sales $3200$ units

Selling price per unit R$100$

Finished products on $01$ March $2022400$ units

Products manufactured during the month $3600$ units

Variable manufacturing costs per unit R$26$

Variable selling and administrative costs per unit sold R$12$

Fixed manufacturing costs R$25200$

Fixed selling and administrative costs R$12400$

Additional information

The variable manufacturing cost per unit and total manufacturing cost per unit of the finished goods on $01$ March

$2022$ was R$21\mathrm{.}60$ and R$26\mathrm{.}20$ respectively.

Use the information provided below to calculate the following manufacturing variances for March

$2022.$ Note: Each answer must state whether the variance is favourable or unfavourable.

$2\mathrm{.}2$

$2\mathrm{.}2\mathrm{.}1$ Labour rate variance $(2$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Labour efficiency variance $(2$ marks$)$

$2\mathrm{.}2\mathrm{.}3$ Variable overheads efficiency variance $(2$ marks$)$

Variable overheads expenditure variance $(2$ marks$)$

INFORMATION

Nevada Limited set a standard labour rate of R$32$ per hour and a standard variable overhead rate of R$3\mathrm{.}80$ per

labour hour.

Actual hours worked for March $2022$ were $4910$ at a cost of R$149264.$ The actual variable overhead cost incurred

was R$19640.$ The standard allowance of labour hours for the output achieved was $5000$ hours.