XYZ Ltd produce a mini-kitchen called Tiny Tots, which is enjoying extensive popularity  amongst young children. The following data is available for the month of March 2018: Selling price (per unit) R 116 Units in opening inventory 600 Units manufactured 2 550 Units sold 3 050 Variable costs per unit: Direct materials R12,00  Direct Labour 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: 4.1. Prepare an income statement for the month using the variable costing  method. (10) 4.2. Prepare an income statement for the month using the absorption costing   method. (10)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

XYZ Ltd produce a mini-kitchen called Tiny Tots, which is enjoying extensive popularity 
amongst young children. The following data is available for the month of March 2018:
Selling price (per unit) R 116

Units in opening inventory 600
Units manufactured 2 550
Units sold 3 050
Variable costs per unit:
Direct materials R12,00
 Direct Labour 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:
4.1. Prepare an income statement for the month using the variable costing 
method. (10)
4.2. Prepare an income statement for the month using the absorption costing 
 method. (10)

Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Inventory Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education