RubyCompany, which has only one product, has provided the following data concerning its most recent month of operations:Selling priceP129Units in beginning inventory0Units produced6,300Units sold6,100Units in ending inventory Variable costs per unit:Direct materialsP32Direct laborP50Variable manufacturing overheadP5Variable selling and administrativeP11Fixed costs:Fixed manufacturing overheadP88,200Fixed selling and administrativeP97,600

4.What is the unit product cost for the month under variable costing?

5.What is the unit product cost for the month under absorption costing?

6.The total contribution margin for the month under the variable costing approach is:

7.The total gross margin for the month under the absorption costing approach is:

8.What is the total period cost for the month under the variable costing approach?

9.What is the total period cost for the month under the absorption costing approach?

10.What is the net operating income for the month under variable costing?

11.What is the net operating income for the month under absorption costing

Silvanna Company's absorption costing income statements for the last two years are presented below:Year 1Year 2SalesP70,000P90,000Less cost of goods sold:Beginning inventory06,000Add cost of goods manufactured48,00048,000Goods available for sale48,00054,000Less ending inventory6,0000Cost of goods sold42,00054,000Gross margin28,00036,000Less selling & admin. expenses25,00031,000Net operating incomeP3,000P5,000Data on units produced and sold in each of these years are given below:Year 1Year 2Units in beginning inventory01,000Units produced8,0008,000Units sold7,0009,000Fixed factory overhead totaled P16,000 in each year. This overhead was applied to products at a rate of P2 per unit. Variable selling and administrative expenses were P3 per unit sold.

12.Compute the unit product cost in each year under variable costing.

13.Prepare new income statements for each year using variable costing.

14.Reconcile the absorption costing and variable costing net operating income for each year

Lesley Company, which has just started its operation and has only one product,hired you as management consultant to help them evaluate their operations. The CEO is quite confused with absorption costing and variable costing and which to base their future decisions. Their bookkeeper has provided the following data concerning its most recent month of operations:Selling priceP143 Units in beginning inventory0 Units produced1,200 Units sold1,000 Units in ending inventory200 Variable costs per unit:Direct materialsP33 Direct laborP52 Variable manufacturing overheadP1 Variable selling and administrativeP7 Fixed costs:Fixed manufacturing overheadP38,400 Fixed selling and administrativeP4,000

15.Prepare an income statement for the month using the contribution format and the variable costingmethod

.16.Prepare an income statement for the month using the absorption costing method.

17.Cite the advantages and disadvantages of variable costing methodand which method should thecompany use if they want to know how many unitsthey should sell next period to achieve their targetprofit?Address and explain this to the management of Lesley Company.