Bharat Bicycle, located in India, produces an inexpensive yet rugged bicycle for use on crowded city streets. The company sells the bicycle for 710 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the company's operations last year follow:

Units in beginning inventory0

Units produced12,050

Units sold8,400

Units in ending inventory3,650

Variable costs per unit:

Direct materialsR199

Direct labourR209

Variable manufacturing overheadR55

Variable selling and administrativeR19

Fixed costs:

Fixed manufacturing overheadR759,150

Fixed selling and administrativeR506,100

An absorption costing income statement prepared by the company's accountant appears below:

Sales (8,400 units R710 per unit)R5,964,000

Cost of goods sold:

Beginning inventoryR0

Add cost of goods manufactured (12,050 units R?per unit)6,338,300

Goods available for sale6,338,300

Less ending inventory(3,650 units R?per unit)1,919,9004,418,400

Gross margin1,545,600

Selling and administrative expenses:

Variable selling and administrative159,600

Fixed selling and administrative506,100665,700

Operating incomeR879,900

Required:1.Determine how much of the ending inventory of R1,919,900 above consists of fixed manufacturing overhead cost deferred in inventory to the next period.

2.A income statement for the year using the variable costing method.