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QUESTION 2 ( 2 0 Marks ) 2 . 1 REQUIRED Study the information provided below and prepare the Income Statement for the year ended

QUESTION 2(20 Marks)
2.1
REQUIRED
Study the information provided below and prepare the Income Statement for the year
ended 31 December 2023 using the marginal costing method. (11 marks)
INFORMATION
Marburg Manufacturers started operations on 02 January 2023. It produced 50000 units of the only
product that it manufactures and sold 80% of the units produced at a price of R150 per unit during
2023. Variable manufacturing costs amounted to R50 per unit and variable marketing costs amounted
to R30 per unit. Fixed costs totalled R1200000 of which 70% was for manufacturing and 30% was for
administration and marketing.
2.2
REQUIRED
Use the information given below to calculate the following variances. In each case also state whether
the variance is favourable or unfavourable.
2.2.1 Material quantity variance (3 marks)
2.2.2 Total labour variance (without using the labour rate and efficiency variances)(3 marks)
2.2.3 Variable manufacturing overheads expenditure variance (3 marks)
INFORMATION
Sona Manufacturers uses the standard costing system. The standards are as follows:
Direct material 3 kg @ R8 per kg
Labour 5 hours at R100 per hour
Variable manufacturing overheads R20 per labour hour
Fixed overheads R30000
Normal production 19000 units
Actual information for March 2024:
Direct material used 61000 kg at R7.80 per kg
Labour 98000 hours at R105 per hour
Variable manufacturing overheads R1862000
Fixed overheads R32000
Actual production 20000 units

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