Question
PROBLEM 2 Butler Manufacturing produces fireproof data storage containers that sell for P6,000 each. The company has the following cost structure: Manufacturing Costs Direct materials
PROBLEM 2
Butler Manufacturing produces fireproof data storage containers that sell for P6,000 each. The company has the following cost structure:
Manufacturing Costs |
|
Direct materials per unit | P1,000 |
Direct Labor per unit | 2,000 |
Variable manufacturing overhead per unit | 500 |
Total Variable Manufacturing Cost per unit | 3,500 |
Fixed Manufacturing Cost per unit | 2,000,000 |
Selling Costs |
|
Variable selling costs per peso of sales | P0.10 |
Fixed selling cost per year | 600,000 |
Administrative Cost |
|
Fixed Administrative cost per year | 800,000 |
At the start of 2017, there was no beginning inventory. During 2017, the company produced and sold 2,000 units. During 2018, the company produced 2,500 units but still sold only 2,000 units.
Requirements
- Calculate the full manufacturing cost per unit for 2017 and 2018.
- Prepare full costing income statements for 2017 and 2018.
- Calculate the variable manufacturing cost per unit for 2017 and 2018.
- Prepare variable costing income statements for 2017 and 2018.
- Reconcile the difference in net income for 2018 between the full costing and the variable costing approaches.
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