QUESTION 1

REQUIRED Prepare the Income Statement of Marys Manufacturers the year ended 31 December 2020 using the:

1.2 Absorption costing method. (10 Marks)

INFORMATION The following information was extracted from the accounting records of Marys Manufacturers for the years ended 31 December 2020 and 31 December 2019:

	31 December 2020		31 December 2019
	Units	R	Units	R
Sales for the year	3 500	?	3 700	666 000
Selling price per unit		200		180
Production for the year	4 100		4 000
Finished goods at beginning of year	?		Nil
Variable manufacturing costs per unit
Variable selling and administrative costs per unit		50		45
Fixed manufacturing costs per year		25		24
Fixed selling and administrative costs per year		45 100		36 000
		24 000		25 000

Additional information 1. Marys Manufacturers uses the FIFO method for the valuation of inventory.

2. The increase in the fixed manufacturing costs is due to a new rental agreement in respect of the factory.