Bharat Bicycle, located in India, produces an inexpensive yet rugged bicycle for use on crowded city streets. The company sells the bicycle for 650 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		9,250
Units sold		7,400
Units in ending inventory		1,850
Variable costs per unit:
Direct materials	R	164
Direct labour	R	218
Variable manufacturing overhead	R	87
Variable selling and administrative	R	47
Fixed costs:
Fixed manufacturing overhead	R	360,750
Fixed selling and administrative	R	240,500

An absorption costing income statement prepared by the companys accountant appears below:

Sales (7,400 units R650 per unit)				R	4,810,000
Cost of goods sold:
Beginning inventory	R	0
Add cost of goods manufactured (9,250 units R ? per unit)		4,699,000
Goods available for sale		4,699,000
Less ending inventory (1,850 units R ? per unit)		939,800			3,759,200
Gross margin					1,050,800
Selling and administrative expenses:
Variable selling and administrative		347,800
Fixed selling and administrative		240,500			588,300
Operating income				R	462,500

Required:

1.	Determine how much of the ending inventory of R939,800 above consists of fixed manufacturing overhead cost deferred in inventory to the next period.

2.	Prepare an income statement for the year using the variable costing method.