JLS Co. began its operations on January 1, 2020. It produces a single product that sells for P13.50 per unit. The Company uses an actual (historical) cost system. During the year, 150,000 units were produced and 135,000 units were sold. There was no work-in-process inventory at December 31, 2020.

Manufacturing costs and selling and administrative expenses for 2020 were as follows:

Variable Costs

Raw Materials P3.50 per unit produced

Direct LaborP 2.50 per unit produced

Factory OverheadP1.00 per unit produced

Selling and AdministrativeP1.20 per unit sold

Fixed Cost

Factory OverheadP195,000

Selling and AdministrativeP 140,000

1.What amount would VV's operating income be using variable costing method?

2.What would VV's operating income be for 2020 under the absorption costing?

3.What are the cost of ending inventory of absorption and variable costing?

(please indicate solution and explanation)