CONFIDENTIAL

$7$

QUESTION $5(24$ marks; $43\mathrm{.}2$ minutes$)$

Grunewald Company manufactures a professional grade vacuum cleaner and began operations in $2018.$ For $2018,$ Grunewald budgeted to produce and sell $50000$ units and this objective was achieved. The company writes off production volume variance to cost of goods sold. Actual data for $2018$ are given as follows

$\backslash$table$[[$Units produced,$50000],[$Units sold,$44800],[$Selling price,R$1200],[$Variable costs:,$],[$Manufacturing cost per unit produced:,R$55],[$Direct materials,R$45],[$Direct manufacturing labour,R$120],[$Manufacturing overhead,R$75],[$Marketing cost per unit sold,$],[$Fixed costs:,R$7358400],[$Manufacturing costs,R$4905600],[$Administrative costs,R$15622400],[$Marketing$,]]$

Required:

$5\mathrm{.}1$ Prepare an income statement using absorption costing.

$(10)$

$5\mathrm{.}2$ Prepare an income statement using variable costing.

$(10)$

$5\mathrm{.}3$ Reconcile the profits.

$(4)$