Answer Happy

3.
Calculate the profit before tax as per
absorption costing principles of The Lescorp
Company for the year ended 31 March 2022.
(Hint: You need to prepare a reconciliation from the
variable costing profit to the absorption costing profit)
LAGA Company manufactures and sell a unique diesel engine part. The company's plant is highly automated with low variable and high fixed manufacturing costs. The company accounts for inventory on a first-in, first-out basis (FIFO). The profit before tax for the recent financial year ended 31 March 2021, prepared on the absorption costing basis, is presented below: Actual 2021 R 432 000 Sales Cost of sales -338 000 Opening inventory 0 Total manufacturing costs 370 000 -32 000 Less closing inventory Gross Profit 94 000 Less total administrative and selling expenses -66 000 28 000 Net profit before tax Actual information for the 2021 financial year ended 31 March 2021, as well as the information for the 2022 financial year, is provided below: Actual Forecast Description 2021 2022 R12.00 R13.30 Selling price per unit Sales in units 36 000 42 000 Normal production in units 50 000 50 000 Actual production in units 40 000 55 000 R3.00 R3.60 Total variable manufacturing costs per unit Total fixed manufacturing costs R250 000 R302 500 R1.00 R1.00 Variable selling and administration costs per unit Total fixed selling and administration costs 30 000 30 000 REQUIRED Sub- Total Total You may IGNORE any TAX implications 1. | Calculate the profit before tax as per variable costing principles of The Lescom Company for the year ended 31 March 2021. 6 6 (Hint: You need to prepare a reconciliation from the absorption costing profit to the variable costing profit) 2. Prepare the forecasted income statement of The Lescomp Company for the year ended 31 March 2022 as per variable costing principles. 8 8