During the first month of operations 500 chairs were produced of 300 were sold .The selling price was 1500 per chair .The manufacturing costs for November 2021 included direct materials of R240 per unit ,direct labour of R150 per unit, variable manufacturing overheads of 90 per unit and fixed manufacturing overheads of R120 000 per month.fixed administration costs amounted to R60 000 per month.marketing costs included a sales commission of 5% of sales revenue and advertising costs of 4% of sales revenue

During December 2021,1000 chairs were produced whilst 800 were sold , during this month the variable manufacturing costs per unit increased by 10% but all other costs remained the same or were determined in the same way as for November 2021 .The selling price for chairs sold during December 2021 was increased by 5% because of the increase in some costs.

question 1

Prepare Income statement for the month 31 December 2021 using the absorption costing method

question 2

Prepare Income statement for the month 31 December using the variable costing method

question 3

Calculate the value of mixed manufacturing costs in the opening and closing inventory, using absorption costing method

question 4

what advice would you offer the directors regarding the use of the income statement that shoes the higher profit (if the net profit s differ) when presenting the financial statements to shareholders