QUESTION FIVE[20]

Little Guys produce a mini-kitchen called Tiny Tot, which is enjoying extensive popularity amongst young children. The following data is available for the month of July 2019:

Selling price (per unit)

R 116

Units in opening inventory

600

Units manufactured

2 550

Units sold

3 050

Units in closing inventory

100

Variable costs per unit:

Direct materials

R12,00

Direct labor

R50,00

Variable manufacturing overhead

R6,50

Variable selling and administrative

R10,00

Fixed costs:

Fixed manufacturing overhead

R81 000

Fixed selling and administrative

R14 000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

5.1Calculate the unit product cost for the month under variable costing.(4)

5.2 Calculate the unit product cost for the month under absorption costing.(3)

5.3 Prepare a income statement for the month using the variable costing method.(6)

5.4Prepare a income statement for the month using the absorption costing method.(5)

5.5Reconcile the variable and absorption costing net operating incomes for the month.(2)