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Question Four Absorption and Marginal Costing (20 marks) The following information was extracted from the accounting records of ZFD Manufacturers for the year ended September

Question Four Absorption and Marginal Costing (20 marks) The following information was extracted from the accounting records of ZFD Manufacturers for the year ended September 2019: UNITS Inventory at the beginning of the year Nil Production for the year 14 500 Sales for the year (at R60 per unit) 13 000 R Direct Materials cost per unit 15 Direct Labour cost per unit 9 Variable Manufacturing overheads per unit 6 Variable selling and administrative cost per unit 3 Fixed manufacturing overhead cost 174 000 Fixed selling and administrative cost 75 000 The company utilises the first-in-first-out method of inventory valuation.

Required:

4.1 Prepare the Income Statement using the Marginal Costing method. (11 marks)

4.2 Prepare the Income Statement using the Absorption Costing method. (9 marks)

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