Answer Happy

Thotho manufactures headscarves.
The following information is available in her books on December
31, 2012.
Manufacturing costs: Variable costs:
- Direct material/headscarf
- Direct labour hour cost used to make one scarf
- Variable manufacturing overhead
Fixed manufacturing overheads per year
25
9
5
150,000
Selling and administrative costs:
Commission paid for selling one scarf
Fixed selling and administration costs per year
10
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)