Vodacom SA OD .|| 35% 19 14:01 You 7 photos 21 October 2019 QUESTION 2 MARGINAL COSTING 25 MARKS Fiona Limited manufactures a bath foam product and sells a single 500ml bottle to retailers at R40 per unit. Fixed manufacturing overheads are allocated as a percentage of direct material cost. The budgeted fixed manufacturing overheads amount to R75 000 and are based on a budgeted direct material cost of R50 000. The total actual production and other costs for 2016 are as follows: R44 800 R90 400 R31 200 5% Direct material cost Direct labour cost Variable manufacturing overheads Commission on sales Variable packaging cost Fixed marketing cost Fixed manufacturing overheads R1 500 R30 000 R70 000 Fiona limited produce 8 000 units in 2016. There were 3 000 units in opening inventory and 10 000 units were sold. Production was 20% more in 2017 than in 2016 and there were 1 300 units in closing inventory. All variable production unit costs increased by 10% in 2017. All fixed cost increased by 5%. Required: 2.1 Calculate the unit cost using absorption costing approach for both 2015 and 2017 5 marks 2.2 Compile the income statements for 2016 and 2017 using the direct costing approach 15 marks 2.3 Reconcile the difference in profit between the two years 5 marks 3 Vodacom SA OD .|| 35% 19 14:01 You 7 photos 21 October 2019 QUESTION 2 MARGINAL COSTING 25 MARKS Fiona Limited manufactures a bath foam product and sells a single 500ml bottle to retailers at R40 per unit. Fixed manufacturing overheads are allocated as a percentage of direct material cost. The budgeted fixed manufacturing overheads amount to R75 000 and are based on a budgeted direct material cost of R50 000. The total actual production and other costs for 2016 are as follows: R44 800 R90 400 R31 200 5% Direct material cost Direct labour cost Variable manufacturing overheads Commission on sales Variable packaging cost Fixed marketing cost Fixed manufacturing overheads R1 500 R30 000 R70 000 Fiona limited produce 8 000 units in 2016. There were 3 000 units in opening inventory and 10 000 units were sold. Production was 20% more in 2017 than in 2016 and there were 1 300 units in closing inventory. All variable production unit costs increased by 10% in 2017. All fixed cost increased by 5%. Required: 2.1 Calculate the unit cost using absorption costing approach for both 2015 and 2017 5 marks 2.2 Compile the income statements for 2016 and 2017 using the direct costing approach 15 marks 2.3 Reconcile the difference in profit between the two years 5 marks 3