REQUIRED

Use the information provided below to answer the following questions:

2.1

Prepare the Income statement of Chateau Manufacturers for October 2017 using the:

2.1.1

Variable costing method

(9 marks)

2.1.2

Absorption costing method.

(9 marks)

2.2

State TWO (2) advantages of variable costing.

(2 marks)

The following information relates to the only product manufactured by Chateau Manufacturers during October 2017:

Opening inventory

Nil

Number of units manufactured

3 000

Number of units sold

2 700

Selling price per unit

R400

Variable manufacturing costs per unit

R160

Fixed manufacturing overhead costs

R120 000

Variable selling costs per unit

R30

Fixed selling costs

R60 000

Fixed administrative costs

R80 000