prepare an income statement
All inventory is valued on a first-in-first-out basis. • During July 2023, in addition to producing and selling the regular girl’s and ladies’ clothing, Courageous also produced ladies’ overalls, men’s overalls and unisex overall jackets. • The accounting team prepared the following extract from the company’s Statement of Profit or Loss and Other Comprehensive Income (SPLOCI) for the month of July 2023: SPLOCI July 2023 R Revenue 26 318 850 Cost of sales (16 544 762) Gross profit 9 774 088 Operating expenses (11 900 000) Net interest expense (385 000) Profit before taxation (2 510 912) Current taxation 652 837 Profit / (Loss) for the month (1 858 075) • Assume that the cost of sales amount given in the extract from Courageous’ SPLOCI is comprised as follows: Product Type Composition of cost of sales Fixed cost portion of cost of sales Girl’s clothing 21% 19% Ladies’ clothing 34% 8% Ladies’ overalls 14% 7% Men’s overalls 25% 6% Unisex overall jackets 6% 8% • The fixed costs included in the product cost in cost of sales are allocated to the products based on the actual number of units produced. Assume that Courageous has a fantastic team of financial planners and the actual amount of fixed costs allocated to production during the month is equal to the actual fixed costs incurred during the month. • Assume that the operating expenses are semi-variable and are comprised as follows: July 2023 June 2023 Sales expenses R2 616 003 R2 595 600 Distribution expenses R6 104 007 R
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