QUESTION one

Read the case study below and answer the questions that follow. Hendry Limited produces a mini-kitchen called Town Cook, which is enjoying extensive popularity amongst young children. The following data is available for the month:

SELLING PRICE PER UNIT	R116
UNITS IN OPENING INVENTORY	600
UNITS MANUFACTURED	2550
UNITS SOLD	3050
UNITS IN CLOSING INVENTORY	100
VARIABLE COST PER UNIT
DIRECT MATERIAL	R12.00
DIRECT LABOUR	R50.00
VARIABLE MANUFACTURING OVERHEAD	R6.50
VARIABLE SELLING AND ADMINISTRATIVE	R10.00
FIXED COST:
FIXED MANUFACTURING OVERHEAD	R81000
FIXED SELLING AND ADMINISTRATIVE	R19000

The company produces the same number of units every month, although the sales in units vary from month to month. The companys variable costs per unit and total fixed costs have been constant from month to month. (where applicable, round off amounts to two decimal places)

2.1 Calculate the unit product cost for the month under marginal costing. (3 marks) 2.2 Calculate the unit product cost for the month under absorption costing (3 marks) 2.3 Prepare an income statement for the month using the absorption costing method. (7 marks) 2.4 Prepare an income statement for the month using the Marginal costing method. (7 marks