1. Sky Castle Manufacturing Company incurred the following costs during its current production of 2,500 teddy bears, alongside its office and administrative operations: Direct materials used, P80 per unit Indirect materials, P40,000 (P16 per unit) Direct labor, 3 hours per teddy bear at P60 per hour Indirect labor, P80,000 (1 hour per unit, P32 per hour) Office salaries, P354,000 Depreciation - manufacturing equipment, P3,700 Depreciation - office equipment, P4,800 Rent of factory facility - P80,000 Rent of office and selling space - P92,000 The management decided to conduct review of costs to restructure operations based on its strategic position. The following were the results of their developmental researches and analysis: The purchasing department was able to look for a supplier which can reduce direct material cost to P65 per unit and reduce total indirect materials by P2 per unit. The management has evaluated that these materials are of the same quality as what they are currently using. Another supplier is known to offer P90 per unit of higher quality raw materials with no change in indirect labor. Upon review of in-house time and motion studies, direct labor can be reduced to 2.50 hours per teddy bear by eradicating nonvalue-adding activities. Total number of employees will not be changed and indirect labor will not be changed. All office salaries, depreciation, and rent costs are fixed. Relating to Sky Castle Manufacturing Company's current production, how much are total product costs and period costs?

P770,000 and P534,500, respectively.

P650,000 and P654,500, respectively.

P853,700 and P450,800, respectively.

P1,304,500 and P-0-, respectively.

None of the above

2. British Columbia Corp manufactures several lines of skiing equipment. Its Canada plant makes a single model, the GENOCIDE-25 ski. The following data are available for 2013: Sales is 37,000 units at P 70 per unit; production is 39,000 units; Standard manufacturing variable cost is P 15 per unit; standard fixed overhead cost is P 25 per unit. The selling and administrative expenses are as follows: Fixed cost totaled P 600,000 and variable cost per unit is P 8.00. British Columbia use normal activity and budgeted fixed cost of P 2,000,000. Fifty percent of the budgeted fixed cost pertains to manufacturing cost and this is used to set its standard manufacturing fixed cost per unit. There were no beginning inventories. Based on the given data, compute the net income using the standard variable costing.

139,000

126,000

142,000

148,000

None of the above