1. Outdoors Company manufactures sleeping bags that sell for P30 each.The variable standard costs of production are P19.50.Budgeted fixed manufacturing overhead is P100,000, and budgeted production is 10,000 sleeping bags.The company actually manufactured 12,500 bags, of which 11,000 were sold.There were no variances during the year except for the fixed-overhead volume variance.Variable selling and administrative costs are P0.50 per sleeping bag sold; fixed selling and administrative costs are P5,000.

Required:

a.Calculate the standard product cost per sleeping bag under absorption costing and variable costing.

b.Compute the fixed-overhead volume variance.

c.What is the net income for the year using absorption costing?

d.What is the net income for the year using variable costing?