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AbsVarCost_LucasBenni_Sol

# Expenses year 2 sales admin expenses year 3 change r

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Unformatted text preview: ses – Year 2 Sales & Admin. Expenses – Year 3 Change R 123,000 R 116,000 R 7,000 R Sales Less Cost of Goods Sold: Opening Inventory [200 x (R50+R60+R20+R120)] Plus Production [ 1500 x (R50+R60+R20+R200)] Less Closing Inventory (100 x R330) Variable Sales & Admin. Expenses = R 7 000/700 = R10 per pair Variable Man. O/Heads Year 1 Year 2 Year 3 = = = R 40 000 R 50 000 R 30 000 Variable Sales & Admin. Year 1 Year 2 Year 3 R10 x 2000 R10 x 2300 R10 x 1600 = = = R 20 000 R 23 000 R 16 000 Fixed Manufac. O/H’s Year 1 Year 2 Year 3 R 340 000 – R 40 000 = R 350 000 – R 50 000 = R 330 000 – R 30 000 = R 300 000 R 300 000 R 300 000 Fixed sales & Admin. b. R20 x 2000 R20 x 2500 R20 x 1500 Year 1 Year 2 Year 3 R 120 000 – R 20 000 = R 123 000 – R 23 000 = R 116 000 – R 16 000 = R 100 000 R 100 000 R 100 000 Over/Under-applied overheads [(1500 x R200) – R300 000)] Gross Margin Less Sales & Administration Expenses: Fixed Variable (1600 x R10) 50 000 495 000 (33 000) 512 000 0 48 000 100 000 16 000 116 000 (68 000) Net Income (Loss) Calculation of Overhead Application rate: Opening inventory: R 300 000 / 2500 pairs = R 120 per pair Clo...
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