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Question 2 (25 Marks) 2.1 As a Finance intern at Arsenal Manufacturers, use the information provided below to prepare the Income Statement of the organisation
Question 2 (25 Marks) 2.1 As a Finance intern at Arsenal Manufacturers, use the information provided below to prepare the Income Statement of the organisation for March 2019 using the: 2.1.1 Variable costing method 2.1.2 Absorption costing method. 2.2 (8 Marks) 8 Marks) Reconcile the profit calculated according to variable costing with the profit calculated according to absorption costing. Advise the management on the best method to be used by the organisation. (2 Marks) 2.3 (5 Marks) INFORMATION The following information relates to the only product produced by Arsenal Manufacturers during March 2019: Opening inventory Number of units manufactured Number of units sold Selling price per unit Direct materials cost per unit Direct labour cost per unit Fixed manufacturing overhead costs Variable manufacturing overheads per unit R30 Fixed selling costs Fixed administrative costs Variable selling costs per unit Nil 3 000 2 500 R300 R60 R50 R90 000 R50 000 R60 000 R20
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