Reynaldo Company began operations in 2006 and has been hired by Elmer Inc. to make car seat cushions. Product specifications are likely to continue at least until model year 2009. Data for this product are used to compare absorption and variable costing procedures and presentations. The company uses standard cost for material and labor and predetermined rates for variable and fixed overhead. The following information were given below: ,

Question:

1. what is the difference in come before tax between absorption and variable costing in 2006

2.What is the difference in income? in 2007

3. What is the difference in income in 2008?

4.How much is the ending inventory under absorption costing in 2007

5.How much is the ending inventory under variable costing in 2008

P2.04 Sales per unit Standard variable cost per unit Direct material Direct labor Variable manufacturing overhead Total variable manufacturing cost per unit Annual units made Annual units sales Change in Finished Goods Inventory 2006 300,000 300,000 2 Total 900.000 900,000 2007 2008 290,000 310.000 220.000 330.000 20.00-20.000 1.50 0.18 P1.72 Budgeted Annual Fred Factory Overhead Budgeted Annual Capacity in Units Standard Fred Factory Overhead Rate FOH rate P162.000 300.000 - POSG P3.72 0.54 P1.26 Total absorption cost per unit Standard variable manufacturing cost Standard fed manufacturing overhead (SFOH) Total absorption cost per unit Budgeted nonproduction expenses Variable selling expenses per unit Fixed selling and administrative expenses 20:24 P2340