Exercise 2-7 (With Variances). The president of Toblerone, Inc. has been reviewing the income statements of the two most recent months. She is puzzled because sales rose and profits fell in March, and she asks you, the controller, to explain. February March Sales (P30 per case) P 540,000 P 660,000 Standard cost of sales 270.000 330,000 Standard gross profit P 270.000 P330.000 Volume variance 40.000 (50,000) Selling and administrative expenses (150.000) (150.000) Income P160.000 P130,000 ==EEEEEE ======= The standard fixed cost per case is P10, based on normal capacity of 20,000 cases per month. Requirements: a. Determine the production volume for each month. b. Prepare the March income statement using variable costing. Exercise 2-8. (With Variances) Pro-Pinoy Products presents the following data from absorption costing income statements for the last two years: 20A 20B Sales.......... P2.000.000 P2.500.000 Cost of goods sold (at standard) 800.000 950.000 Over- or underapplied overhead. 25.000 (25.000) Marketing and general expense. 500.000 550.000 Operating income...... 675.000 1.050.000 Required: Prepare the direct costing income statements for each year, assuming that there were no changes in capacity between years and that the unit variable costs are constant. (Hint: Use the high- and low-points method to determine the fixed and variable portions of each cost element.)