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Bharat Bicycle, located in India, produces an inexpensive yet rugged bicycle for use on crowded city streets. The company sells the bicycle for 592 rupees,

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Bharat Bicycle, located in India, produces an inexpensive yet rugged bicycle for use on crowded city streets. The company sells the bicycle for 592 rupees, (Indian currency is denominated in rupees, denoted by R.) Selected data for the company's operations last year follow: 0 15,550 13,200 2,350 R R 140 185 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative R 59 R 29 R1,119,600 R746,400 An absorption costing Income statement prepared by the company's accountant appears below: R 7,814,400 Sales (13,200 units * R592 per unit) Cost of goods sold: Beginning inventory R Add cost of goods manufactured (15,550 units x R ? per unit) 7,090,800 An absorption costing income statement prepared by the company's accountant appears below: R7,814,400 20 0 Sales (13,200 units * R592 per unit) Cost of goods sold: Beginning inventory Add cost of goods manufactured (15,550 units XR ?. per unit) 7,090,800 7,090,800 Goods available for sale Less ending inventory (2,350 units * R 2. per unit) 1,071,600 6,019,200 1,795,200 Gross margin Selling and administrative expenses: Variable selling and administrative Fixed selling and administrative 382,800 746,400 1,129,200 R 666,000 Operating income Required: 1. Determine how much of the ending inventory of R1,071,600 above consists of fixed manufacturing overhead cost deferred in inventory to the next period. Total fixed manufacturing overhead in ending inventory R 2. Prepare an income statement for the year using the variable costing method. Variable Costing Income Statement 20 Variable expenses: Variable cost of goods sold: 0 0 OO Fixed expenses: 0 R 0 Prey 19 of 20 Next

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