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    Absorption and Variable Costing Act3

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    Gill Riguera
    The document provides information on variable and absorption costing for multiple companies. It includes income statements, production and sales figures, and cost breakdowns. Students are asked to calculate net income and ending inventory values using both variable and absorption costing methods based on the data provided.

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    Absorption and Variable Costing Act3

    Uploaded by

    Gill Riguera
    593 views2 pages
    The document provides information on variable and absorption costing for multiple companies. It includes income statements, production and sales figures, and cost breakdowns. Students are asked to calculate net income and ending inventory values using both variable and absorption costing methods based on the data provided.

    Original Title

    ABSORPTION AND VARIABLE COSTING ACT3

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    The document provides information on variable and absorption costing for multiple companies. It includes income statements, production and sales figures, and cost breakdowns. Students are asked to calculate net income and ending inventory values using both variable and absorption costing methods based on the data provided.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    593 views2 pages

    Absorption and Variable Costing Act3

    Uploaded by

    Gill Riguera
    The document provides information on variable and absorption costing for multiple companies. It includes income statements, production and sales figures, and cost breakdowns. Students are asked to calculate net income and ending inventory values using both variable and absorption costing methods based on the data provided.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ABSORPTION VS.

    VARIABLE COSTING
    ACTIVITY 2

    NAME:
    SECTION:

    A) Peter Corporation produces and sells a single product. In 2018, its first year of operation, planned
    and actual production was 80,000 units. It sold 75,000 of these units for P30 per unit.

    Planned and actual costs in 2018 were as follows:

    Manufacturing Non-manufacturing

    Variable P480,000 P400,000


    Fixed 320,000 240,000

    1. Using Absorption costing, the company’s operating income in 2018 would be?
    2. Using Variable costing, the company’s operating income in 2018 would be?

    B) Zechariah’s Corp. produces and sells boxed choco cookies. There are 100 pieces of cookies per box.
    The following income statement shows the results of the first year operations. This income
    statement was the one included in the company’s annual report to the shareholders:

    Sales (600 boxes at P25 per box) P15,000


    Less: Cost of goods sold (600 boxes at P16 per box) 9,600
    Gross margin 5,400
    Less: Selling and administrative expenses 2,400
    Income 3,000

    During the year, the Company produced 750 boxes. Variable production costs is P10.50 per box and
    fixed manufacturing overhead costs totaled P4,125.

    1. What is the Company’s variable costing net income?


    2. How much is the ending inventory for both Absorption costing and Variable costing?

    C) Jeremiah Company produces a single product. Production is done only when orders are received
    from customers. Thus, no inventory is kept at the end of the period. For the last period, the
    following data were available:

    Sales P32,000 Sales commission 1,040


    Materials 7,240 Fixed Insurance (60% factory) 960
    Labor 4,840 Office supplies 600
    Fixed Rent (90% factory, 10% office) 2,400 Advertising (Variable) 560
    Fixed Depreciation (80% factory, 20% office) 2,000
    Fixed Supervision (2/3 factory, 1/3 office) 1,200

    How much is the company’s Net income under Absorption costing and Variable costing
    ABSORPTION VS. VARIABLE COSTING
    ACTIVITY 2

    D) During its second year of operations, a company produced 82,500 units but sold only 80,000 units for
    P26 per unit. It had an inventory balance of 5,000 units at the start of the year. The following costs were
    incurred during the year:

    Variable costs per unit


    Direct materials P4.50
    Direct labor 3.00
    Manufacturing overhead 3.75
    Selling and administrative expenses 0.75
    Fixed costs
    Manufacturing overhead P660,000
    Selling and administrative expenses P412,500

    1. Determine the net income under Absorption costing and Variable costing.
    2. Assume that the number of units produced were 80,000 units and the number of units sold
    were 82,500 units. Determine the net income under Absorption and Variable costing.

    E) Haggai Company produces a single product. At the end of the year, the company had 30,000 units in
    its ending inventory. Variable production costs are P10 per unit and its fixed manufacturing
    overhead costs are P5 per unit every year. The Company’s net income for the year was 12,000
    higher under variable costing than under absorption costing. Given these facts, the number of units
    of product in inventory at the beginning inventory of the year must have been?

    F) Zecharaiah Company had 200,000 income using absorption costing. The company had no variable
    manufacturing costs. Beginning inventory was P15,000 and ending inventory was P22,000. Income
    under variable costing would have been?

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