Cost of goods sold Gross margin Less selling & admin. Expenses Net operating income 42,000 28,000 25,000 P3,000 54,000 36,000 31,000 P5,000 Data on units produced and sold in each of these years are given below: Year 1 Units in beginning inventory Units produced Units sold Year 2 1,000 8,000 9,000 8,000 7,000 Fixed factory overhead totaled P16,000 in each year. This overhead was applied to products at a rate of P2 p unit. Variable selling and administrative expenses were P3 per unit sold. Required: a. Compute the unit product cost in each year under variable costing. b. Prepare new income statements for each year using variable costing. c. Reconcile the absorption costing and variable costing net operating income for each year.
Cost of goods sold Gross margin Less selling & admin. Expenses Net operating income 42,000 28,000 25,000 P3,000 54,000 36,000 31,000 P5,000 Data on units produced and sold in each of these years are given below: Year 1 Units in beginning inventory Units produced Units sold Year 2 1,000 8,000 9,000 8,000 7,000 Fixed factory overhead totaled P16,000 in each year. This overhead was applied to products at a rate of P2 p unit. Variable selling and administrative expenses were P3 per unit sold. Required: a. Compute the unit product cost in each year under variable costing. b. Prepare new income statements for each year using variable costing. c. Reconcile the absorption costing and variable costing net operating income for each year.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 87PSB
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