Blades $($Pty$)$ Ltd $($Blades$)$ is a manufacturer that specialises in the manufacturing of Saws. Blades uses an absorption costing system and is currently planning the entity$$s budgeted activity for the following financial year ending $2025.$ The following information pertains to the financial year ended $31$ December $2024.$ Budget details for the financial year ended $2024$ Blades only manufactures a single product, Saws, which it plans to sell at a mark$-$up of $100\%$ on prime cost. Prime cost is R$600$ per unit, of which $60\%$ comprises raw materials and $40\%$ is direct labour. Production overheads show the following cost$-$volume relationship, and this is not expected to change in the foreseeable future:

Units produced $3000040000$ Cost in

Rands $1100000012000000$

$$ The budgeted production is $35000$ units.

$$ Blades pays a commission of $5\%$ of the sales value per unit for each product sold.

$$ Fixed selling and administration costs amount to R$5000000.$

$$ The entity wishes to achieve a budgeted profit of R$2400000$ before tax.

Actual results for the financial year ended $2024$ Actual sales units were $35000.$ The selling price per unit and all costs were exactly as budgeted. Blades had no opening inventory of any kind. The closing inventory was $4000$ units of finished goods

Additional information

$$ The managing director attempted to calculate the number of units Blades should sell in order to achieve its targeted profit of R$2400000$ before tax, as follows: $=$ R$2400000+[($R$11000000+$ R$12000000)/2)]/($R$600$ x $2)=11583\mathrm{.}33$ units

$$ The managing director is confused. $$We had no price or cost variances, our sales were exactly as planned, yet we still made a higher profit than what we planned for. I$$m not complaining, but there might be a mistake. I don$$t want to pay more tax than I have to$!$

$$ Inventory is valued according to the FIFO method.

REQUIRED:

$1\mathrm{.}2$ Prepare the actual income statement based on the absorption costing system. $(7\mathrm{.}5$ marks$)$

$1\mathrm{.}3$ Prepare the actual income statement according to variable costing principles. $(4\mathrm{.}5$ marks$)$