Question
A company manufactures and sells a single product. Planned and actual production in 2015, its first year of operations, was 100,000 units. Planned and actual
A company manufactures and sells a single product. Planned and actual production in 2015, its first year of operations, was 100,000 units. Planned and actual costs in 2015 were as follows:
Manufacturing Non-manufacturing
Variable P600,000 P500,000
Fixed P400,000 P300,000
The company sold 85,000 units of product in 2015 at a selling price of P30 per unit.
a. Using absorption costing, the company's operating income in 2015 would be_____________.
b. Using the variable costing, the company's operating income in 2015 would be____________.
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Penchant Company's records for the year ended December 31, 2015 shows that no finished goods inventory existed at January 1 and no war was in process at the beginning or end of the year. Other data are as follows:
Net Sales P1,400,000
Cost of goods manufactured:
Variable 630,000
Fixed 315,000
Operating expenses:
Variable 98,000
Fixed 140,000
Units manufactured 70,000 units
Units Sold 60,000 units
a. What would be Penchant's finished goods inventory cost at December 31 under absorption costing method?
b. Under absorption costing method, the operating income for the year is________________. c. Under variable costing method, the operating income for the year is __________________
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