3.1 Fresh Products manufactures and sells a variety of camping products. Recently, the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below: Manufacturing Costs Fixed overhead Variable overhead int gnibo sfT as animuA sldav P 108,000 P 3 per unit P 12 per unit P 30 per unit O units 12,000 10,000 Direct labor Direct material Beginning inventory Units produced Units sold Selling and administrative costs Fixed Variable 0.0b aniwollot s nillse P 200,000 buboq lo sinu g P4 per unit sold The portable cooking unit sells for P110. Management is interested in the openin month's results and has asked for an income statement. Instructions: 1. Assume the company uses absorption costing. Calculate the production cost per u and prepare an income statement for the month of June 2007. 2. Assume the company uses variable costing. Calculate the production cost per unit, prepare an income statement for the month of June 2007. 3. Explain the amount by which absorption costing income would differ from varia costing income. (Compute difference without computing absorption costing income)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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3.1
Fresh Products manufactures and sells a variety of camping products. Recently, the
company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales
data for the first month of operations are shown below:
Manufacturing Costs
Fixed overhead
Insivni gnibno orfT as
P 108,000 sdsinv gnimuA
P 3 per unititaco sldaiusv
P 12 per unit A
P 30 per unit
00,0
nolevni
Variable overhead
Direct labor
Direct material
Beginning inventory
Units produced
Units sold
anil Selling and administrative costs aid 1oi sidalie
O units
12,000 000.0E.b
10,000
notha
aniwolloi odT
Fixed
Variable
P 200,000
bubonq lo sinu req P4 per unit sold aldsinaV
Isunns laloT
The portable cooking unit sells for P110. Management is interested in the openin
month's results and has asked for an income statement.
Instructions:
1. Assume the company uses absorption costing. Calculate the production cost per u
and prepare an income statement for the month of June 2007.onovni gni
2. Assume the company uses variable costing. Calculate the production cost per unit,
prepare an income statement for the month of June 2007.
3. Explain the amount by which absorption costing income would differ from varia
costing income. (Compute difference without computing absorption costing income)
Transcribed Image Text:3.1 Fresh Products manufactures and sells a variety of camping products. Recently, the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below: Manufacturing Costs Fixed overhead Insivni gnibno orfT as P 108,000 sdsinv gnimuA P 3 per unititaco sldaiusv P 12 per unit A P 30 per unit 00,0 nolevni Variable overhead Direct labor Direct material Beginning inventory Units produced Units sold anil Selling and administrative costs aid 1oi sidalie O units 12,000 000.0E.b 10,000 notha aniwolloi odT Fixed Variable P 200,000 bubonq lo sinu req P4 per unit sold aldsinaV Isunns laloT The portable cooking unit sells for P110. Management is interested in the openin month's results and has asked for an income statement. Instructions: 1. Assume the company uses absorption costing. Calculate the production cost per u and prepare an income statement for the month of June 2007.onovni gni 2. Assume the company uses variable costing. Calculate the production cost per unit, prepare an income statement for the month of June 2007. 3. Explain the amount by which absorption costing income would differ from varia costing income. (Compute difference without computing absorption costing income)
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