JPIA Corporation began its operations on January 1. It produces a single product that sells for P13.50 per unit. The company uses an actual (historical) cost system. 150,000 units were produced and 135,000 units were sold. There was no work-process inventory at December 31, 200A. Manufacturing costs and selling and administrative expenses for 200A were as follows: Fixed costs Variable costs Raw materials - P3.50 per unit produced Direct labor - 2.50 per unit produced Factory overhead P195,000 1.00 per unit produced Selling and administrative 140,000 1.20 per unit produced P335,000 P8.20 What amount would the operating income be using the absorption costing method?
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.
JPIA Corporation began its operations on January 1. It produces a single product that sells for P13.50 per unit. The company uses an actual (historical) cost system. 150,000 units were produced and 135,000 units were sold. There was no work-process inventory at December 31, 200A.
Manufacturing costs and selling and administrative expenses for 200A were as follows:
Fixed costs Variable costs
Raw materials - P3.50 per unit produced
Direct labor - 2.50 per unit produced
Factory
Selling and administrative 140,000 1.20 per unit produced
P335,000 P8.20
What amount would the operating income be using the absorption costing method?
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