The example below will be used to answer concept questions $1-4$

rganisation ABC has a $30$ June year$-$end. The company manufactures a single type of handbag The selling price of a handbag is R$200$ The company uses an absorpbon costing system for product costing

The following information is relevant for the movement in quantities

Budgeted and actual production $10000$ units

Opening inventory $0$

Units sold $9000$ units

Actual and budgeted costs for the year were as follows

Direct materials: fixed cost $(0)$ Variable cost $($R$50000$ per unit produced$)$

Direct Labour: fixed cost$(0)$ and Variable cost $($R$30000$ per unit produced$)$

Manufacturing overhead $($allocated based on actual

production$)$: Fixed cost $($R$90000)$ and Variable Costs $($ R$5,00$ per unit produced$)$

Selling and administrative expenses: Fixed costs $($R$100000)$ and Variable costs $($R$6,00$ per unit sold$)$

$2.$ Determine the finished goods inventory value at June $30$ using absorption costing

A$.9400$ B$.8500$ C$.940000$ D$.850000$

$3.$ Determine the cost per unit using variable costing

A$.85$ B$.80$ C$.115$ D $94$

$4.4.$ Determine the finished goods inventory value at June $30$ using variable costing.

A$.9400$ B$.8500$ C$.940000$ D$.850000$

$5.$ Under which of the following conditions, is net income higher under absorption costing $($relative to variable costing$)?$

A$.$ Current period production exceeds sales B$.$ Inventory is reduced during the current period C$.$ Sales prices are rising D$.$ Net income is higher under absorption costing under all conditions

$6.$ An entity has opening inveritory of $5000$ units, produces $15000$ units in the period and has a closing inventory of $6\mathrm{.}000$ units. The entity should use an absorption costing system to report a higher profit. True or False?

$7.$ Absorption costing results in better information for short term decision making True or False?