13. During its first year of operations, a company produced 275,000 units and sold 250,000 units.

The following costs were incurred during the year:

Variable Cost per Unit Fixed Costs

Direct materials $15.00

Direct labor 10.00

Manufacturing overhead 12.50 $2,200,000

Selling and administrative 2.50 1,375,000

The difference between operating income calculated on the absorption-costing basis and on the variable costing basis is that absorption-costing operating income is

A. $200,000 greater. B. $220,000 greater. C. $325,000 greater. D. $62,500 lesser.

14. A company has the following cost data:

Fixed manufacturing costs $2,000

Fixed selling, general, and administrative costs 1,000

Variable selling costs per unit sold 1

Variable manufacturing costs per unit 2

Beginning inventory 0 units

Production 100 units

Sales 90units at $40 per unit

Variable and absorption-cost net incomes are:

A. $320 variable, $520 absorption C. $520 variable, $320 absorption

B. $330 variable, $530 absorption D. $530 variable, $330 absorption

15. A company manufactures 50,000 units of a product and sells 40,000 units. Total

manufacturing cost per unit is $50 (variable manufacturing cost, $10; fixed manufacturing

cost, $40). Assuming no beginning inventory, the effect on net income if absorption costing

is used instead of variable costing is that:

A. net income is $400,000 lower C. net income is the same

B. net income is $400,000 higher D. net income is $200,000 higher

16. A company had an income of P50,000 using direct costing for a given month. Beginning and

ending inventories for the month are 13,000 units and 18,000 units, respectively. Ignoring

income tax, if the fixed overhead application rate was P2 per unit, what was the income using

absorption costing?

A. P40,000 B. P50,000 C. P60,000 D. P70,000