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Problem A. The C Division of White Company sells  its product for P30 per unit. Variable cost per unit are: manufacturing, P12; and selling and administrative, P2. Fixed cost are: P200,000 manufacturing overhead, and P50,000 selling administrative. There was no beginning inventory in 2007. Expected sale for next year is 40,000 units. Ryan Santos, the manager of the C Division, is under pressure to improve the performance of the division. As he plans for next year, he decided to produce 40,000 units. What would the manufacturing cost per unit be under absorption costing? What would the manufacturing cost per unit be under variable costing?   What would the net income be under absorption costing? What would the net income be under variable costing?

Problem A. The C Division of White Company sells  its product for P30 per unit. Variable cost per unit are: manufacturing, P12; and selling and administrative, P2. Fixed cost are: P200,000 manufacturing overhead, and P50,000 selling administrative. There was no beginning inventory in 2007. Expected sale for next year is 40,000 units. Ryan Santos, the manager of the C Division, is under pressure to improve the performance of the division. As he plans for next year, he decided to produce 40,000 units. What would the manufacturing cost per unit be under absorption costing? What would the manufacturing cost per unit be under variable costing?   What would the net income be under absorption costing? What would the net income be under variable costing?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem A. The C Division of White Company sells  its product for P30 per unit. Variable cost per unit are: manufacturing, P12; and selling and administrative, P2. Fixed cost are: P200,000 manufacturing overhead, and P50,000 selling administrative. There was no beginning inventory in 2007. Expected sale for next year is 40,000 units. Ryan Santos, the manager of the C Division, is under pressure to improve the performance of the division. As he plans for next year, he decided to produce 40,000 units.

  1. What would the manufacturing cost per unit be under absorption costing?
  2. What would the manufacturing cost per unit be under variable costing?

 

  1. What would the net income be under absorption costing?
  2. What would the net income be under variable costing?
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