QUISTION 2

2.1)INCOME STATEMENT FOR OCTOBER 2013 FOR ROBUST LTD

SALES
COST OF GOODS SOLD
OPENING INVENTORY
MANUFACTURED INVENTORY:
DIRECT MATERIAL
DIRECT LABOUR
PRODUCTION OVERHEAD
CLOSING INVENTORY
FIX MANUFACTURED OVERHEADS UNDER APPLIED
GROSS PROFIT
LESS PERIOD COST:
SELLING AND ADMINISTRATION COST
NETTO PROFIT
NOTES
1) SALES
6039000/73200= R82.5 PER UNIT
5000+6550+6100=17650 UNITS SOLD
82.5*17650= 1456125
2) TOTAL UNITS PRODUCED
FIX BUGETED OVERHEADS = 1647000*0.8=1317600 FOR YEAR
=1317600/12 = 109800 PER MONTH
JANUARY FIX BUGETED OVERHEADS = ACTUAL FIX OVERHEADS FOR JANUARY
6100X=109800
X= 109800/6100= R18 PER UNIT ( FIX MANUFACTURED ALLOCATION RATE)
PROVE THAT 18 IS CORRECT
FEB FIX BUGETED OVERHEADS < ACTUAL FIX OVERHEADS FOR FEB
6350*18<6350*18 +11665
114300<125965
18 PER UNIT < 19.837 PER UNIT
18=19.837 - 11665/6350
18=19.837 - 1.837
18=18
1317600/18= 73200 TOTAL UNITS PRODUCED FOR YEAR
3) DIRECT MATERIAL
878400/73200= R12 PER UNIT
6100+6350+5750 = 18200 UNITS PRODUCED

18200*12 = 218400
4) DIRECT LABOUR
446520/73200 =R 6.1 PER UNIT
18200*6.1= 111020
5) VARIABLE- AND FIX MANUFACTURING OVERHEAD COST
VARIABLE
1647000*0.2= 329400/73200=R4.5 PER UNIT
18200*4.5= 81900
FIX
18*18200 = 327600
TOTAL = 327600+81900=409500
6) CLOSING INVENTORY
18200-17650 = 550 ( 12+6.1+4.5+18) = 22330
7) FIX MANUFACTURING OVERHEADS UNDERAPPLIED
11665( FEBS UNDER APPLIED) - 3900 ( MARCH OVER APPLIED) = 7765 ( UNDER APPLIED)
8) SELLING AND ADMINISTRATION COST
UNITS
R
54000
1120000
77000
1290000
23000
170000
170000/23000 = R7.39 PER UNIT VARIABLE COST
1120000- 54000*7.39= 720940 FIX COST FOR YEAR
720940/12 *3 =180235 FIX COST FOR FIRST QUARTER
TOTAL = 180235 + 17650*7.39

2.2) INCOME STATEMENT FOR OCTOBER 2013 FOR ROB

SALES
LESS VARIABLE COST:
OPENING INVENTORY
MANUFACTURED INVENTORY:
DIRECT MATERIAL
DIRECT LABOUR
VARIABLE MANUFACTURE OVERHEADS
COST OF GOODS AVAILABLE FOR SALE

ENDING INVENTORY
VARIABLE COST OF GOODS SOLD
VARIABLE SELLING AND ADMINISTRATION COST
CONSTRIBUTION MARGIN
LESS FIX COST :
FIX MANUFACTURING OVERHEADS
FIX SELLING AND ADMINISTRATION COST
PROFIT
9) ENDING INVENTORY
550 * (6.1+12+4.5) = 12430
10) VARIABLE SELLING AND ADMINISTRATION COST
17650 * 7.39 = 130434
11) FIX MANUFACTURING OVERHEADS
18 * 18200 +11665- 3900 = 335365

OBUST LTD
NOTES

1456125
-724355
0

3
4
5
6
7

218400
111020
409500
-22330
7765
731770

-310669
421101

FOR ROBUST LTD

NOTES

1456125
0

3
4
5

218400
111020
81900
411320

9
10

-12430
398890
130434

11
8

335365
180235

-529324
926801

-515600
411201