Thotho manufactures headscarves. The following information is available in her books on December 31, 2012.

	BWP
Opening inventory	1,500
Headscarves made during the year	9,000
Headscarves sold during the year	9,500
Closing inventory	1,000
Selling price	90
Manufacturing costs:
Variable costs:
Direct material/headscarf	25
- Direct labour hour cost used to	9
make one scarf	5
Variable manufacturing	150,000
overhead
Fixed manufacturing overheads per Year
Selling and administrative costs:
Commission paid for selling one scarf	10
Fixed selling and administration costs per year	100,000

Required:

a) Prepare the income statement for the year ended December 31, 2012 using

i) Variable costing. (15 marks)

ii) Absorption cost (15 marks)