Del Corporation developed the following standard unit costs at normal production capacity, which is 100,000 units: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total P5 4 2 9 P20 The selling price for each unit of product is P35. Variable commercial expenses are P2 per unit. The selling price and the costs of the product have not changed since the company began operations two years ago. Data related to the operations of the company for the past two years follow: 2019 2020 Units actually produced 95,000 106,000 Units sold 90,000 110,000 Fixed commercial expenses P500,000 P550,000 REQUIRED: 1. Prepare a comparative income statement for 2019 and 2020 under the absorption costing method. 2. Prepare a comparative income statement for 2019 and 2020 under the direct costing method. 3. Compute and reconcile the differences in income for the two years under the absorption costing and direct costing methods. The controller of George Corporation instructs the cost supervisor to use an algebraic procedure for allocating service department costs to producing departments. The corporation's three(3) producing departments are served by three(3) service departments, each of which consumes part of the services of the other two(2). After primary but before reciprocal distribution, the account balances of the service departments and the interdependence of the departments were tabulated as follows: Department Departmental Overhead Before Distribution of SERVICES PROVIDED Powerhouse Personnel General Factory Service Depts. Mixing P1,200,000 25% 35% 25% Refining 540,000 25% 30% 20% Finishing 630,000 20% 20% 20% Powerhouse 96,000 10% 20% Personnel 177,000 10% 15% General Factory 252,000 20% 5% Totals P2,895,000 100% 100% 100% REQUIRED: 1. Compute the final amount of overhead of each service department after reciprocal transfer costs have been calculated algebraically. 2. Compute the total factory overhead of each producing department. 3. The Mixing Department's predetermined overhead rate is based on machine hours. The total rate is P36.00, 40% of which is fixed. Fixed factory overhead budgeted is P576,000. The actual machine hours for the period were 37,000. Compute the spending and idle capacity variance for the corporation. Cost Accounting Original equations: A= P96,000 +.10B +.20C B= P177,000 +.10A +.15C C= P252,000 +.20A +.05B Alternative 1: Step 1. Insert equation A into equations B and C. B= P177,000+.10(P96,000 +.10B +.20C) +.15C C= P252,000+.20(P96,000 +.10B +.20C) +.05B Step 2. Derive new equations B and C from step 1. B= P177,000 +P9,600 +.01B +.02C +.15C B= P186,600 +.01B +.17C .99B= P186,600 +.17C R= P186,600 +.17C .99 New B= P188,485 +.1717172C C= P252,000 +P19,200 +.02B +.04C +.05B C=P271,200 +.07B +.04C .96C= P271,200 +.07B P271,200 +.07B .96 Exercise 11-10 New C-P282,500 +.0729167B Step 3. Compute for B, C, and A, compute last what was inserted in step 1. New B= P188,485 +.1717172(P282,500+.0729167B) B= P188,485 +P48,510 + .0125211B .9874789B= P236,995 B= P236,995 .9874789 B P240,000 New C= P282,500 +.0729167(P240,000) C= P282,500 + P17,500 C= P300.000 Original A= P96,000+.10(P240,000) +.20(P300,000) A= P96,000 + P24,000 + P60,000 A= P180.000