Write A if the cost is classified as a VARIABLE COST while B if the cost is a FIXED COST.

1. Tomatoes used in the manufacturer of Hunts Ketchup

2. Administrative salaries of executives employed by Philippine Airlines

3. Wages of assembly-line worker at a Toyota Automobile Company

4. Marketing expenditures of the Coca Cola Company

5. Commission paid to Coca-Cola Salesman

6. Straight line depreciation on manufacturing equipment owned by Acer Computer

7. Shipping charges incurred by Office Depot on out-going orders

8. Speakers used in Sony Home-theater systems

9. Insurance costs related to a Mary Kay Cosmetics' manufacturing plant

10. Property taxes paid by Del Monte on its Pineapple Plantation

PART II. complete solutions.

A. The following is DELFA STAR INTERNATIONAL CORPORATION contribution format income statement for last month:

Sales 2,000,000

Variable Costs 1,400,000

Contribution Margin 600,000

Fixed Costs 360,000

Net Income 240,000

The company has no beginning or ending inventories. A total of 40,000 units were produced and sold last month.

Required:

1. Compute the company's contribution margin ratio.

2. Compute the company's sales (in units) if the company would like to attain a target profit of P300,000.

3. Compute the break-even point (in units)

4. If sales increase by 200 units, net income would increase by?

5. Compute the margin of safety in peso and as percentage of sales

6. If the company's sales will decrease by 10%, what will be the decrease in net income (use the margin of safety)

B. NVSU Corporation sell its only product for P70.00 each. The current production level is 25,000 units although only 20,000 units were sold.

Direct materials P 12.00 per unit

Direct Labor P 18.00 per unit

Variable Overhead P 09.00 per unit

Fixed Overhead P180,000.00 per year

Selling and Administrative Expenses P 60,000.00 per year

Required:

1. Compute the per unit cost under variable and absorption costing.

2. Compute the manufacturing cost per unit under variable and absorption costing.

3. Prepare Income Statement under variable and absorption costing.