Cuisine (Pty) Ltd produces luxury water bottles. During the year 2021, the company produced 28 000 bottles and sold 26,500 bottles. Fixed production overheads are applied using units produced as allocation base. The actual fixed production overheads were the same as what had originally been budgeted, but actual production was 2 000 units more than expected. The direct labour hours for the year amounted to 30 000 hours. In the 2022 financial year the management of Cuisine (Pty) Ltd decided to look at a variable costing approach to get a different perspective and asked you the financial manager to prepare an Income Statement based on the variable costing approach for the year. Assume the opening inventory was valued at R15 per unit and there were based on 2021 stock and this is the correct figure. In the current year, Production was 27 000 and sales were 24000. The per unit costs are as follows: Variable Direct Material (R2,5), and Variable Direct Labour (R3). The Fixed Overhead production is R5 per unit and the Variable Overhead cost per unit is R5. The Selling and Marketing costs from the previous year remain the same for both the Fixed and Variable costs.

Prepare the income statement for the year 2022 using a variable costing system.

Sales Price per unit						R 25.00
Total Variable Direct Material						R65 000.00
Variable Direct Wages per hour						R 2.50
Total Budgeted Fixed Production Overheads						R260 000.00
Total Fixed selling and Marketing costs						R50 000.00
Variable selling and marketing costs per unit						R 2.00