Question
Deep Cleaners Ltd (DeepC) manufactures high-quality industrial detergents at their plant based in the Qwaqwa area of the Free State. DeepC manufactures two products namely
Deep Cleaners Ltd ("DeepC") manufactures high-quality industrial detergents at their plant based in the Qwaqwa area of the Free State. DeepC manufactures two products namely Multi-purpose ("Multi") and Ultra-clean ("Ultra"). Both products are packaged and sold to cleaning companies and property managers in 10-litre plastic containers (one unit). The manufacturing process uses a significant quantity of water, and the water is obtained from the municipal water system. DeepC's financial statements are prepared using the absorption costing system, valuing all its inventory items using the first-in-first-out (FIFO) method, and having a 31 August financial year-end.
QUESTION 2. ACTUAL INFORMATION FOR THE MONTH ENDING 30 SEPTEMBER 2022
2.1. The actual direct labour clock minutes for one unit of Multi and one unit of Ultra were 6,3 and 9 minutes, respectively. The actual direct labour rate was R105 per direct labour clock hour and the idle time was 6% for both products.
2.2. DeepC manufactured 120 400 units of Multi and 49 700 units of Ultra during September 2022.
2.3. The actual sales units were 121 000 Multi units and 53 200 Ultra units.
2.4. The actual variable selling and distribution costs were R4,00 per unit.
Please assume the following
? a standard costing system is in place.
? the implications, if any, of opening and closing inventory should be ignored.
? budgeted sales occurred evenly over the 12 months.
? budgeted and actual information for September 202
Details Multi Ultra Standard contribution per unit R110 R140 Actual contribution per unit R125 R145 Standard gross profit per unit R90 R115 Actual gross profit per unit R100 R120Step by Step Solution
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