3.16A company had income of P40,000 using variable costing for a given period. Beginningand ending inventories for that period were 18,000 and 13,000 units, respectively. Ignoringincome taxes, if the fixed overhead application rate was P7 per unit, what would the income beif absorption costing was used?3.17A company had income of P30,000 using absorption costing for a given period.Beginning and ending inventories for that period were 13,000 and 18,000 units, respectively. Thefixed overhead application rate was P2 per unit. (Ignore income taxes). What would the incomebe if variable costing was used?3.18Perspire company produces a single product. Last year, the company's net operatingincome computed using absorption costing method was P6,400 and its operating incomecomputed using variable costing method was P9,100. The company's unit product cost was P16under variable costing and P20 under absorption costing. If the ending inventory consisted of2,100 units, the beginning inventory in units must have been3.19Franz began business at the start of this year and had the following costs: variablemanufacturing cost per unit, P9 (DM is P5); fixed manufacturing costs, P60,000; variable sellingand administrative costs per unit, P2; and fixed selling and administrative costs, P220,000. Thecompany sells its units for P45 each. Additional data follow:Planned production in unitsActual production in unitsNumber of units sold10,00010,0008,000Compute for the net income/(loss) under absorption, variable and throughput costing

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3.16 A company had income of P40,000 using variable costing for a given period. Beginning and ending inventories for that period were 18,000 and 13,000 units, respectively. Ignoring income taxes, if the fixed overhead application rate was P7 per unit, what would the income be if absorption costing was used?

3.16 A company had income of P40,000 using variable costing for a given period. Beginning and ending inventories for that period were 18,000 and 13,000 units, respectively. Ignoring income taxes, if the fixed overhead application rate was P7 per unit, what would the income be if absorption costing was used?

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

3.16
A company had income of P40,000 using variable costing for a given period. Beginning
and ending inventories for that period were 18,000 and 13,000 units, respectively. Ignoring
income taxes, if the fixed overhead application rate was P7 per unit, what would the income be
if absorption costing was used?
3.17
A company had income of P30,000 using absorption costing for a given period.
Beginning and ending inventories for that period were 13,000 and 18,000 units, respectively. The
fixed overhead application rate was P2 per unit. (Ignore income taxes). What would the income
be if variable costing was used?
3.18
Perspire company produces a single product. Last year, the company's net operating
income computed using absorption costing method was P6,400 and its operating income
computed using variable costing method was P9,100. The company's unit product cost was P16
under variable costing and P20 under absorption costing. If the ending inventory consisted of
2,100 units, the beginning inventory in units must have been
3.19
Franz began business at the start of this year and had the following costs: variable
manufacturing cost per unit, P9 (DM is P5); fixed manufacturing costs, P60,000; variable selling
and administrative costs per unit, P2; and fixed selling and administrative costs, P220,000. The
company sells its units for P45 each. Additional data follow:
Planned production in units
Actual production in units
Number of units sold
10,000
10,000
8,000
Compute for the net income/(loss) under absorption, variable and throughput costing

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