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) 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 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 R19 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. (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
