QUESTION 3 (20 Marks)

The following information relates to the only product made by Ace Limited for the year ended 31 May 2020:

Opening inventory 0

Number of units manufactured 9 000

Number of units sold (at R540 per unit) 7 200

Direct materials cost per unit R90

Direct labour cost per unit R180

Variable manufacturing overheads cost per unit R90

Variable selling expenses per unit R20

Fixed manufacturing overheads cost R450 000

Fixed selling and administrative expenses R180 000

Required:

Draft the income statement for the year ended 31 May 2020 using the:

3.1 Marginal Costing method (10 marks)

3.2 Absorption costing method (10 marks)